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Disposal by Super Group of its 53.584% interest in SG Fleet Group Limited and withdrawal of cautionary announcement
Super Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1943/016107/06)
LEI: 378900A8FDADE26AD654
Share code: SPG
ISIN: ZAE000161832
Debt Company Code: BISGL
("Super Group" or the "Company" or the "Group")
PROPOSED DISPOSAL BY SUPER GROUP OF ITS 53.584% INTEREST IN SG FLEET
GROUP LIMITED AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Super Group shareholders ("Super Group Shareholders" or
"Shareholders") and noteholders are referred to:
• the announcement released by SG Fleet Group Limited ("SG Fleet")
on the Australian Stock Exchange ("ASX") on 25 November 2024
advising shareholders of SG Fleet ("SG Fleet Shareholders") that
SG Fleet is in discussions with Pacific Equity Partners Pty
Limited and certain of its affiliates ("PEP") in relation to a
non-binding and indicative proposal from PEP to acquire all of
the shares in SG Fleet ("SG Fleet Shares") at a price of AUD3.50
per share;
• the Super Group cautionary announcement released on the Stock
Exchange News Service ("SENS") on 25 November 2024 making Super
Group Shareholders aware of the SG Fleet announcement and
placing Super Group under cautionary; and
• the announcement released by SG Fleet on the ASX today advising
SG Fleet Shareholders that SG Fleet has entered into a Scheme
Implementation Deed ("SID") with Westmann Bidco Pty Limited
("Bidco"), an entity owned and controlled by funds managed and
advised by PEP under which Bidco has agreed to acquire 100% of
the SG Fleet Shares by way of a scheme of arrangement ("Scheme")
for a cash consideration of AUD3.50 per SG Fleet Share ("Scheme
Consideration". A copy of the announcement can be accessed on
the SG Fleet website at
https://investors.sgfleet.com/Investors/?page=asx-
announcements.
Should the Scheme be implemented, Super Group, through its wholly
owned subsidiary, Bluefin Investments Limited ("Bluefin Investments")
will, subject to the conditions precedent detailed in paragraph 5.4
below, dispose of its 53.584% interest in SG Fleet for a purchase
consideration of AUD641.4 million (c. R7.53 billion1) ("Purchase
Consideration") ("Proposed Transaction").
2. RATIONALE FOR SCHEME AND THE PROPOSED TRANSACTION
The board of directors of Super Group ("Super Group Board") believe
that the Proposed Transaction is in the best interests of Super Group
Shareholders based on the following:
• Liquidity event: The Proposed Transaction will create a liquidity
event for Super Group after many years of investment in SG Fleet
whilst still allowing the Group to continue its involvement in
integrated logistics, transport and mobility solutions;
• Ability for Super Group Shareholders to unlock significant value:
The Proposed Transaction provides an opportunity for Shareholders
to unlock the material value in SG Fleet in the immediate term and
realise a significant premium to the estimated value of SG Fleet
as reflected in Super Group's share price. The Proposed Transaction
also potentially demonstrates the significant undervaluation by
the market of the remainder of Super Group's business. The offer
price of AUD3.50 per SG Fleet Share represents a 31% premium to
the SG Fleet closing share price on 22 November 2024, being the
last trading date prior to the SENS and ASX announcements dated 25
November 2024 and a 30% premium to the 1-month volume weighted
average price;
• Acceleration of value: The Proposed Transaction enables Super Group
Shareholders to realise longer-term value upfront;
• Potential for SG Fleet to remain undervalued in Super Group's share
price: Considering the market's valuation of SG Fleet as
historically reflected in the Super Group share price, there is no
guarantee that future value creation through SG Fleet would be
fully reflected in the Super Group share price;
• Enhancement of Super Group's financial profile and strengthening
of the Group's financial position: Super Group plans to use a
portion of the proceeds (up to R1.96 billion) to reduce debt. The
resulting net gearing of 171.8% at 30 June 2024 is estimated to
reduce to 22.8%. The Group's net debt to EBITDA at 30 June 2024 of
2.96x is estimated to reduce to 0.77x on a pro-forma basis,
resulting in a moderately geared balance sheet that mitigates risk
1 Based on an exchange rate of ZAR/AUD of 11.7443 on December 2024, being the closing exchange
rate on the day immediately preceding signature of the Scheme Implementation Deed
in high interest rate cycles and provides headroom to invest in growth;
• Repositioning of Super Group: Following completion of the Proposed
Transaction, Super Group will be positioned as a leading,
diversified, logistics and mobility solutions provider in sub-
Saharan Africa, Europe and the United Kingdom ("UK") with a
resilient, flexible and sustainable financial profile, and a cash
generation ability. Looking forward, Super Group will continue to
optimise its sub-Saharan Africa and international growth potential
through its Supply Chain, Fleet Africa and Dealerships divisions;
• Increased management and capital allocation focus on attractive
growth opportunities: The implementation of the Proposed
Transaction will allow management to focus its capital allocation
priorities on accelerating its supply chain and dealerships
strategy in Africa, Europe and the UK and enhancing the delivery
of value for Shareholders;
• Simplification of Group structure: Following the Proposed
Transaction, the Group will have a simplified group structure with
a single listed entry point providing greater visibility for
investors; and
• Other: Super Group will retain exposure to hard currency earnings
while benefitting from an increased proportion of earnings from
South Africa and sub-Saharan Africa which are highly correlated to
macroeconomic recovery.
3. DESCRIPTION OF SG FLEET
SG Fleet has been listed on the ASX since 4 March 2014. Headquartered
in Sydney, Australia, SG Fleet is a leading provider of integrated
mobility solutions, including fleet management, vehicle leasing, and
salary packaging services. The company has a presence across
Australia, as well as in the UK and New Zealand, employing
approximately 1 300 staff and managing over 277 000 vehicles.
4. DESCRIPTION OF PEP
PEP is a leading Australian private equity firm, managing and advising
the PEP funds, which have over AUD12 billion in assets under
management. Founded in 1998, PEP has completed 46 primary
transactions and over 170 follow-on investments across a range of
target industries. The PEP funds have a strong track record investing
behind and partnering with high quality management teams to support
long-term business growth.
Funds that ultimately own or control Bidco include Pacific Equity
Partners Fund VII (Australasia) and Pacific Equity Partners Fund VII,
L.P. (collectively, the "Funds"). No natural persons owns or
controls, directly or indirectly 25% or more of the beneficial
interests of the Funds and the Funds are not "related parties" in
relation to Super Group, as defined in section 10 of the JSE Listings
Requirements.
5. SALIENT TERMS PROPOSED TRANSACTION
5.1 General
The terms of the Scheme have been documented in the SID entered
into between Bidco and SG Fleet.
In terms of the Scheme, if implemented, Super Group, through its
wholly owned subsidiary, Bluefin Investments will, subject to the
conditions precedent detailed in paragraph 5.4 below, dispose of
its 53.584% interest in SG Fleet for a purchase consideration of
AUD641.4 million (estimated to be R7.53bn2).
In addition, Super Group and SG Fleet have entered into a
Cooperation Agreement under which Super Group has agreed to convene
the requisite general meeting of Super Group Shareholders ("Super
Group Shareholders Meeting") with the unanimous recommendation of
the Super Group Board (in the absence of a superior proposal and
subject to the SG Fleet independent expert concluding (and
continuing to conclude) that the Scheme is in the best interests
of SG Fleet Shareholders) and not to dispose of any interest in
its SG Fleet shareholding during the term of the SID.
Under the SID, SG Fleet is required to pay a break fee to Bidco in
certain limited circumstances. The amount of the break fee (should
it become payable under the SID) is AUD12.267 million, being an
amount equal to 1% of the aggregate Scheme Consideration.
5.2 Use of proceeds
After preliminary expenses and settling up to R1.96 billion of
Super Group's South African interest-bearing borrowings, Super
Group will utilise the remaining proceeds to declare a distribution
to Shareholders of approximately R16.30 per share ("Special
Distribution") comprising (i) a return of Contributed Tax Capital
("CTC") and (ii) a dividend. The return of CTC component of the
Special Distribution will be R8.00 per Super Group share with the
balance payable as a dividend. The final quantum of the dividend
2 Based on an exchange rate of ZAR/AUD of 11.744 on 3 December 2024, being the closing exchange
rate on the day immediately preceding signature of the Scheme Implementation Deed
will be determined with reference to the AUD/ZAR exchange rate
applicable to the implementation of the Scheme. A dividend
withholding tax of 20% will be applicable to the dividend proportion
of the Special Distribution, unless the Shareholder concerned is
exempt from paying dividend withholding tax or is entitled to a
reduced rate in terms of an applicable double-tax agreement.
5.3 Categorisation of the Proposed Transaction
The Proposed Transaction constitutes a category 1 disposal for
Super Group in terms of section 9 of the JSE Listings Requirements
and requires Super Group Shareholder approval by way of an ordinary
resolution ("Super Group Resolution").
5.4 Conditions precedent and approvals required
The Scheme and the Proposed Transaction are subject to the
fulfillment, or waiver, where capable of waiver, of the following:
5.4.1 Conditions precedent to the Scheme and the Proposed
Transaction
• the SG Fleet independent expert concluding in the
independent expert's report (and continuing to conclude)
that the Scheme is in the best interests of SG Fleet
Shareholders;
• regulatory approvals in South Africa and Australia
customary for a transaction of this nature; and
• SG Fleet shareholder and Australian court approval of the
Scheme.
5.4.2 Conditions precedent to the Proposed Transaction
• approval of the Proposed Transaction by Super Group
Shareholders as a category 1 transaction in terms of the
JSE Listings Requirements;
• Bluefin Investments board and shareholder approvals of the
Proposed Transaction by way of board and shareholder
resolutions; and
• implementation of the Scheme.
5.4.3 Super Group approvals required
• Super Group noteholder approval (66.7%) for a waiver to
condition 18.1.1.9 of the Domestic Medium Term Note
("DMTN") Programme which is in relation to Super Group or
any of its guarantors. Bluefin Investments, being a DMTN
Programme Guarantor, will be selling its controlling stake
in SG Fleet which is more than 50% of its assets, and
therefore requires noteholder consent;
• consent from certain of Super Group's and Bluefin
Investments' lenders to dispose of its 53.584%
shareholding in SG Fleet; and
• Exchange Control approval from the Financial Surveilance
Department of the South African Reserve Bank in terms of
the conditions of the initial approval received when Super
Group acquired SG Fleet in 2004.
5.5 Effective Date of the Proposed Transaction
Subject to the fulfilment or waiver of the conditions precedent
set out in paragraph 5.4 above, the Company expects the effective
date of the Proposed Transaction to occur in March 2025. The SID
provides that the conditions precedent to the Scheme must be
satisfied on or before the End Date which is defined as the later
of (i) 30 June 2025 and (ii) such other date and time agreed in
writing between SG Fleet and Bidco.
5.6 Support for the Scheme and the Proposed Transaction
Subject to the passing of the Super Group Resolution, Super Group
intends to vote all its SG Fleet Shares, held through its wholly
owned subsidiary Bluefin Investments, in favour of the Scheme at
the SG Fleet Shareholder meeting to approve the Scheme, in the
absence of a superior proposal and subject to the SG Fleet
independent expert concluding in the independent expert's report
(and continuing to conclude) that the Scheme is in the best
interests of SG Fleet Shareholders.
Super Group has received written support for the Proposed
Transaction from all Shareholders that it has engaged with,
representing approximately 65% of the Super Group shares in issue
as at the date of this announcement; in the absence of a superior
proposal and subject to the SG Fleet independent expert concluding
that the Scheme is in the best interest of SG Fleet Shareholders.
6. FINANCIAL INFORMATION
Super Group Shareholders and noteholders are advised that:
6.1 The book value of the net assets of SG Fleet attributable to
Super Group Shareholders was AUD313.7 million (R3 811.8 million
at 30 June 2024); and
6.2 The profits attributable to Super Group Shareholders relating to
SG Fleet were AUD47.9 million (R587.1 million).
7. PRO FORMA INFORMATION
The following pro forma effects on the most recent audited financial
results of Super Group are estimated after taking the Proposed
Transaction and Special Distribution into account:
7.1 Net debt reducing from R24.96 billion (30 June 2024) to R2.95
billion;
7.2 Tangible net asset value increasing from R6.90 per share (30
June 2024) to R23.88 per share;
7.3 Net asset value decreasing from R42.90 per share (30 June 2024)
to R38.29 per share; and
7.4 Headline earnings of 229.5 cents per share (year ended 30 June
2024: 353.8 cents per share).
The pro forma effects of the Proposed Transaction, as set out above,
are the responsibility of the Super Group Board. The consolidated pro
forma effects are presented in a manner consistent with the basis on
which the historical financial information has been prepared and in
terms of the Group's accounting policies, the JSE Listings
Requirements, the Guide on Pro Forma Financial Information issued by
SAICA. The pro forma effects have been presented for illustrative
purposes only and, because of their nature, may not give a fair
reflection of the Company's results and financial position post the
implementation of the Proposed Transaction, and assume that the
Proposed Transaction was implemented on 1 July 2023 for purposes of
the pro forma consolidated income statement and 30 June 2024 for
purposes of the pro forma consolidated statement of financial
position, respectively.
8. ENGAGEMENT WITH NOTEHOLDERS
Super Group will be engaging with noteholders to seek approval (66.7%)
for a waiver to condition 18.1.1.9 of the DMTN Programme which is
in relation to Super Group or any of its guarantors. Bluefin
Investments, being a DMTN Programme guarantor, will be selling its
controlling stake in SG Fleet which is more than 50% of its assets,
and therefore requires noteholder consent, as detailed in paragraph
5.4 above. Super Group will engage with noteholders to discuss and
arrange the requisite noteholder votes in support of the waiver.
9. CIRCULAR TO SUPER GROUP SHAREHOLDERS
A circular setting out the full details of the terms of the Proposed
Transaction ("Circular") will be distributed to Super Group
Shareholders in due course. The Circular will, inter alia,
incorporate a notice convening the Super Group Shareholders Meeting
at which Shareholders will be requested to consider, and if deemed
fit, to pass, with or without modification the relevant resolutions
required to approve the Proposed Transaction.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders and noteholders of Super Group are advised that, as a
result of the publication of this terms announcement, the cautionary
announcement is accordingly withdrawn, and Shareholders and
noteholders are no longer required to exercise caution when dealing
in Super Group's securities.
Sandton
4 December 2024
Financial Advisor and Transaction Sponsor
Investec Bank Limited
Legal Advisor
Fluxmans Inc.
Debt Sponsor
Questco Proprietary Limited
Date: 04-12-2024 07:21:00
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