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Divestment by enX of its interest in West African International
ENX GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2001/029771/06)
Share code: ENX
ISIN: ZAE 000222253
Listed on the General Segment of the Main Board
("enX" or "the Company" or "the Group")
DIVESTMENT BY ENX OF ITS INTEREST IN WEST AFRICAN INTERNATIONAL
1. INTRODUCTION
1.1. Shareholders are advised that enX has entered into a Subscription and Options
Agreement ("the Agreement") with Trichem South Africa Proprietary Limited
("Trichem SA" or "Acquirer"), enX Trading Investments Proprietary Limited ("enX
Trading"), enX Leasing Investments Proprietary Limited ("enX Leasing") and
West African International Proprietary Limited ("WAI"), pursuant to which:
1.1.1. Trichem SA will subscribe for 66 667 ordinary no par value shares in the share
capital of WAI ("First Subscription Shares"), equal to 25% of the entire issued
ordinary share capital of WAI post issue, in the manner set out in paragraph 5.1
("First Subscription" or "First Subscription Step");
1.1.2. Trichem SA will have the option to put the First Subscription Shares to enX
Trading in the manner set out in paragraph 5.2. ("Put Option" or "Put Option
Step"); or
1.1.3. Trichem SA will have the option to acquire the remaining 75% interest held by
enX Trading in the manner set out in paragraph 5.4 ("Full Ownership Option"
or "Full Ownership Option Step"), failing which Trichem SA shall again be
entitled for a period of 30 Business Days following expiry of the Full Ownership
Option Period, to exercise the Put Option on written notice to enX Trading
("Extended Put Option Period").
for the considerations calculated in accordance with paragraph 5 below
("Transaction").
1.2. Trichem SA is a wholly owned South African subsidiary of Tricon Dry Chemicals
LLC ("TDC"), which in turn is 100% owned by Tricon International Holdings LLC
("Tricon Holdings"). Both later companies, being collectively referred to as the
"Tricon Group" of companies, are headquartered in Houston, Texas, United
States of America. The Tricon Group was founded in 1996 and is a global leader
in the trade and distribution of chemicals, petrochemicals, polymers, and raw
materials. The company provides comprehensive services, including logistics,
financing, risk management, market intelligence and technical support, to
thousands of business partners across more than 120 countries. The beneficial
owner of Tricon Holdings is Ignacio Torras, being the majority and controlling
shareholder.
2. THE BUSINESS OF WAI
WAI, a wholly owned subsidiary of enX Trading (which in turn is a wholly owned
subsidiary of enX), imports, warehouses, sells and distributes polyolefins, styrenics,
rubber and speciality chemicals into the Southern African market and makes up the
chemical segment ("Chemical Segment") of enX.
3. RATIONALE FOR THE TRANSACTION
3.1. The Transaction is in line with the Company's strategy as set out in the outlook
statement in the summarised group financial results for the year ended 31 August
2024 released on the Stock Exchange News Service on 4 November 2024,
wherein the Company indicated that it would follow a strategy of increasing
shareholder value by growing the underlying businesses and should a suitable
opportunity arise, strategically dispose of those businesses.
3.2. The rationale for disposal of the Chemical Segment is as follows:
3.2.1. the Transaction represents an attractive opportunity for enX Trading to
monetise its investment in the Chemical Segment at a valuation that reflects the
prospects and cash flows of the Chemical Segment;
3.2.2. the disposal would be to a party that is a global player, that understands the
global polymer market and can realise further operational synergies and unlock
further value with the existing management team; and
3.2.3. should the Full Ownership Option be exercised, WAI will be a wholly owned
subsidiary of Trichem SA and all debt will be retained within the WAI group,
being WAI and the entities in which WAI has a beneficial interest ("WAI Group").
3.3. After the final disposal of WAI, surplus cash would be returned to shareholders in
a manner consistent with previous disposals by enX.
4. CLOSING DATE AND EFFECTIVE DATE ACCOUNTS FOR THE TRANSACTION
4.1. The closing date in respect of the First Subscription is the last business day of the
month in which the later of the following dates fall, being (i) the date on which the
last of the suspensive conditions pertaining to the First Subscription is fulfilled or
waived or (ii) the date on which the effective date documents for the First
Subscription are delivered by WAI ("First Subscription Date").
4.2. The closing date in respect of the Put Option is the date on which the Put Option
is exercised by Trichem SA ("Put Option Exercise Date").
4.3. The closing date in respect of the Full Ownership Option is the last business day
of the month in which the later of the following dates fall, being (i) the date on which
the last of the suspensive conditions pertaining to the Full Ownership Option is
fulfilled or waived or (ii) the date on which the effective date documents for the Full
Ownership Option are delivered by WAI ("Full Ownership Exercise Date").
4.4. The effective dates for purposes of calculating the First Subscription Price (and by
implication the Put Option Price) and the Full Ownership Option Subscription Price
(and by implication the Full Ownership Option Repurchase Price) are as follows -
4.4.1. The effective date for the First Subscription (and by implication the Put Option)
is the last day of the month ending prior to Fulfilment, being the date on which
the relevant suspensive conditions relating to the First Subscription and Put
Option are fulfilled or waived.
4.4.2. The effective date for the Full Ownership Option Subscription (and by
implication the Full Ownership Option Repurchase) is the last day of the month
ending prior to Fulfilment, being the date on which the relevant suspensive
conditions relating to the Full Ownership Option are fulfilled or waived.
5. CONSIDERATION AND TERMS OF THE TRANSACTION
5.1. First Subscription
5.1.1. In terms of the First Subscription, Trichem SA will subscribe for the First
Subscription Shares at the First Subscription Price, as determined in
accordance with paragraph 5.1.2. ("First Subscription Price"), on the First
Subscription Date.
5.1.2. First Subscription Price and Calculation of First Subscription
5.1.2.1. The First Subscription Price for the First Subscription Shares will be paid in
cash by Trichem SA on the First Subscription Date and will be an amount
calculated in accordance with the following formula:
A=BxC÷D
Where:
A = the amount of the First Subscription Price being calculated;
B = the amount of the NAV of WAI as per the WAI Group accounts as at the
effective date for the First Subscription, subject to any adjustment thereof
in accordance with the finalised effective date documents
C = 0,25; and
D = 0,75.
5.1.2.2. For purposes of this announcement "NAV" means the equity attributable to
equity holders of WAI as determined in accordance with IFRS, after
consolidating into WAI, the WAI Group, and for the avoidance of doubt,
includes stated capital, other reserves and accumulated profits.
5.1.2.3. Any over or underpayments by either WAI or Trichem SA will be repaid or
paid, as the case may be, following the finalisation of the finalised effective
date documents.
5.2. Put Option
5.2.1. In terms of the Put Option, Trichem SA shall have an irrevocable right and
option (subject to any relevant suspensive conditions and any statutory or
regulatory requirements) to put the First Subscription Shares ("Put Option
Shares") to enX Trading at the put option price as calculated in accordance
with paragraph 5.2.4. of this announcement ("Put Option Price"), on the Put
Option Exercise Date.
5.2.2. The Put Option shall come into, and remain in full force and effect from 1 May
2025 until 30 October 2026, or such other date as agreed to between the parties
("Put Option Period") and if the Full Ownership Option is not exercised by
Trichem SA then the Put Option will again be capable of being exercised during
the Extended Put Option Period.
5.2.3. Trichem SA shall be entitled to exercise the Put Option at any time during the
Put Option Period or Extended Put Option Period, on at least 30 (thirty) days
prior written notice by Trichem SA ("Put Option Notice").
5.2.4. Put Option Price
The Put Option Price for the Put Option Shares will be paid in cash by enX
Trading and shall be equal to the First Subscription Price, less the sum of any
dividends (or other distributions) paid by WAI to Trichem SA prior to the exercise
of the Put Option ("Put Option Price").
5.3. Escrow Agreement
5.3.1. As security for enX Trading's payment obligations in respect of the Put Option
Price, the Company, enX Trading and/or enX Leasing shall transfer an amount
equal to the First Subscription Price ("Escrow Amount") into an interest
bearing account ("Escrow Account"), where it shall be kept between the First
Subscription Date and the earlier of the receipt by Trichem of the full Put Option
Price, the Full Ownership Exercise Date or expiry of the Extended Put Option
Period, to be retained by an escrow agent in accordance with the terms of an
escrow agreement to be entered into between the parties to the Agreement and
an escrow agent ("Escrow Agreement").
5.3.2. The Escrow Account shall bear interest at the interest rate provided for in the
Escrow Agreement ("Escrow Interest") which shall accrue for the benefit of
enX Trading, enX Leasing and/or the Company pro rata in accordance with their
respective contributions towards payment of the Escrow Amount into the
Escrow Account ("Escrow Account Contribution"), save for the portion which
accrues to the escrow agent in terms of the Escrow Agreement.
5.4. Full Ownership Option
5.4.1. At any time from 1 May 2025 until 30 October 2026 ("Full Ownership Option
Period"), Trichem SA shall have the irrevocable right and option (subject to any
relevant suspensive conditions and any statutory or regulatory requirements),
to, on the Full Ownership Option Exercise Date, subscribe for 200 000 ordinary
shares in the authorised share capital of WAI ("Full Ownership Option
Subscription Shares") at the full ownership option subscription price
calculated in accordance with paragraph 5.4.4 of this announcement ("Full
Ownership Option Subscription Price") ("Full Ownership Option
Subscription") and WAI shall use the proceeds from the Full Ownership Option
Subscription to repurchase 200 000 ordinary shares in the issued share capital
of WAI held by enX Trading ("enX Trading Shares") from enX Trading at the
full ownership option repurchase price as calculated in terms of this
announcement ("Full Ownership Option Repurchase Price")("Full
Ownership Option Repurchase").
5.4.2. Trichem SA shall be entitled to exercise the Full Ownership Option at any time
during the Full Ownership Option Period, on the Full Ownership Option Exercise
Date, on prior written notice by Trichem SA to the other parties and the escrow
agent of its intention to exercise the Full Ownership Option ("Full Ownership
Option Notice").
5.4.3. Should Trichem SA elect not to exercise its Full Ownership Option, or fail to do
so for any reason whatsoever within the Full Ownership Option Period, Trichem
SA shall again be entitled during the Extended Put Option Period to exercise its
Put Option on the same terms and conditions as contained in the Agreement, the
salient terms of which are set out in paragraph 5.2. of this announcement.
5.4.4. Full Ownership Option Subscription Price and Calculation of Full
Ownership Option Subscription Price
5.4.4.1. The Full Ownership Option Subscription Price for the Full Ownership Option
Subscription Shares will be paid in cash and will be an amount calculated in
accordance with the following formula:
A = (B x 95%) + (C x 75%) – (D+E)
Where:
A = the amount of the Full Ownership Option Subscription Price being
calculated;
B = the amount of the NAV of WAI as per the WAI Group accounts as at the
effective date of the First Subscription, subject to any adjustment thereof
in accordance with the finalised effective date documents;
C = the profit after tax of WAI Group as calculated in the WAI Group accounts
for the period from the First Subscription Date until the last day of the
month ending prior to the date of exercise of the Full Ownership Option
("Calculation Period"), excluding any expenses recognised in profit
after tax for the Calculation Period attributable to the management
incentive;
D = the aggregate amount of any dividends (or distributions) paid by WAI to
enX Trading during the Calculation Period; and
E = the aggregate post-tax amount to be paid by WAI to all participants (being
the key executives) under and in terms of the management incentive.
5.4.4.2. Any over or underpayments by either WAI or Trichem SA will be repaid or
paid, as the case may be, following the finalisation of the finalised effective
date documents.
5.4.5. Full Ownership Option Repurchase Price and Calculation of Full Ownership
Option Repurchase Price
The Full Ownership Option Repurchase Price payable by WAI to enX Trading will
be paid in cash and will be equal to the amount payable in terms of the Full
Ownership Option Subscription Price.
5.5. Maximum First Subscription Price and Full Ownership Option Price
The maximum aggregate of the First Subscription Price and the Full Ownership
Option Subscription Price (and by implication the Full Ownership Option
Repurchase Price) shall at all times be capped at R450 000 000 (four hundred and
fifty million Rand). Accordingly, the Put Option Price will always be less than this
amount.
6. SUSPENSIVE CONDITIONS
6.1. The First Subscription Step is subject to the fulfilment or waiver (to the extent
legally permissible) of the following suspensive conditions ("Suspensive
Conditions") by such date as may be specified below unless otherwise agreed to
in writing by the parties -
6.1.1. By no later than the signature date, the necessary approvals and confirmations
having been obtained from the board of directors and where necessary, the
shareholders of the parties.
6.1.2. On or before the 30 April 2025 ("First Long Stop Time") -
6.1.2.1. an amended memorandum of incorporation for WAI, which increases its
authorised no par value ordinary share capital to allow for the issue of the
First Subscription Shares and Full Ownership Option Shares, having been
adopted, filed with, and accepted by the Companies and Intellectual Property
Commission;
6.1.2.2. to the extent required, the Transaction having been approved by Trichem
SA's local bankers in their capacity as authorised foreign exchange dealers,
or by the South African Reserve Bank, if required, in compliance with the
South African exchange control regulations;
6.1.2.3. enX Trading obtaining from FNB and providing to Trichem SA consents and
releases under the bank facilities (including the fulfilment of any conditions
set by FNB for such release);
6.1.2.4. the Escrow Agreement being entered into and becoming unconditional in all
respects save for any condition requiring the Agreement to become
unconditional;
6.1.2.5. each key executive having signed an addendum to their employment
contracts; and
6.1.2.6. the relevant WAI Group companies obtaining written consents or giving written
notice for the change of control resulting from the Transaction for material
contracts.
6.2. The Suspensive Conditions contained in paragraph 6.1.2.1. to 6.1.2.2. are
regulatory in nature and may not be waived. The remaining Suspensive Conditions
contained in paragraph 6.1. have been included for the benefit of all the parties
and accordingly the parties may agree to waive the fulfilment of any of the
Suspensive Conditions (in part or in whole) before or on the First Long Stop Time.
6.3. The Put Option Step and all the rights and obligations of the parties to the
Agreement which are applicable to the Put Option Step are subject to the closing
of the First Subscription Step.
6.4. The Full Ownership Option Step is subject to the fulfilment or waiver (to the extent
legally permissible) of the following Suspensive Conditions by no later than 17h00
on a date 4 (four) months after the Full Ownership Option Notice is delivered by
Trichem or such later time as agreed to between the parties to the Agreement
("Second Long Stop Time"):
6.4.1. the closing of the First Subscription Step having occurred;
6.4.2. the Competition Authorities having approved the merger that would result from
the Transaction (in the event that the Full Ownership Option Step is exercised)
in writing, either unconditionally or subject to conditions as agreed to between
the parties to the Agreement;
6.4.3. to the extent required the approval of the Transaction by the Takeover
Regulation Panel and the JSE and any other governmental or regulatory
authority;
6.4.4. shareholder approval having been obtained if upon delivery by Trichem SA of
the Full Ownership Option Notice the Transaction constitutes a disposal by enX
Trading and enX Group of the greater part of its assets of undertaking as
contemplated in section 112 read with section 115 of the Companies Act No.71
of 2008 (''Companies Act'');
6.4.5. compliance with the Companies Act, as amended and any other relevant
legislation as well as the JSE Listings Requirements;
6.4.6. the necessary approvals by the board of directors of all of the parties and where
required, their respective shareholder's approvals by way of a resolution having
been obtained; and
6.4.7. the relevant WAI Group companies obtaining written consents from the relevant
counterparties for the direct or indirect change of control in WAI which is to
result from the implementation of the Transaction, or where applicable, the
relevant WAI Group company giving written notice to each of the relevant
counterparties as agreed between Trichem SA and enX Trading.
6.4.8. The Suspensive Conditions contained in paragraphs 6.4.2. to 6.4.5. are
regulatory in nature and may not be waived. The remaining Suspensive
Conditions contained in paragraph 6.4 have been included for the benefit of all
the parties and accordingly the parties may agree to waive the fulfilment of any
of the Suspensive Conditions (in part or in whole) before or on the Second Long
Stop Time.
7. SIGNIFICANT TERMS OF THE AGREEMENT
7.1. The Agreement contains warranties appropriate for transactions of this nature.
7.2. The Agreement contains restraints appropriate for transactions of this nature.
7.3. In the event that Trichem SA is precluded from exercising its Full Ownership Option
by reason of any Suspensive Condition contained in paragraph 6.4 which is
regulatory or statutory of nature being rejected by a regulator and/or the enX
Shareholders and not being capable of being fulfilled by the Second Long Stop Time,
then the Company shall pay to Trichem SA an amount of R5 000 000 (five million
Rand) in full and final settlement of any and all liability owed by the Company, enX
Trading, WAI and/or any other entity in the Group to Trichem SA and/or to the Tricon
Group.
8. USE OF PROCEEDS
8.1. The First Subscription Price received into WAI will be used to either fund growth
within the WAI business and/or to reduce its working capital facilities which should
result in a reduction of financing costs.
8.2. Should the Full Ownership Option be exercised, the Board anticipates that the
proceeds which are not used for transaction expenses and applicable taxes, will
be applied as a return of capital to shareholders.
9. FINANCIAL INFORMATION
In terms of the latest audited annual financial statements of enX for the financial
year ended 31 August 2024, the net asset value of the Chemicals Segment
amounted to R283 million while the attributable profit before taxation of the
Chemicals Segment amounted to R84 million for the year ended 31 August 2024.
10. CLASSIFICATION OF THE TRANSACTION
The First Subscription Step and the Put Option Step of the Transaction constitute
a category 2 transaction in terms of the JSE Limited Listings Requirements.
Johannesburg
31 March 2025
Corporate Advisor and Transaction Sponsor
Valeo Capital (Pty) Ltd
Sponsor to enX:
The Standard Bank of South Africa Limited
Legal advisor to the Seller:
Munro Smith Parker Law and Thomson Wilks
Date: 31-03-2025 08:00:00
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