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NIVEUS INVESTMENTS LIMITED - Category 1 Related Party Transaction-Disposal by Niveus of its interest in Alphawave and a portfolio of properties

Release Date: 01/07/2019 08:00
Code(s): NIV     PDF:  
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Category 1 Related Party Transaction-Disposal by Niveus of its interest in Alphawave and a portfolio of properties

NIVEUS INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1996/005744/06)
Share code: NIV
ISIN: ZAE000169553
(“Niveus” or “the Company”)


CATEGORY 1 RELATED PARTY TRANSACTION ANNOUNCEMENT RELATING TO THE DISPOSAL BY
NIVEUS OF ITS INTEREST IN ALPHAWAVE AND A PORTFOLIO OF PROPERTIES

1.   INTRODUCTION

     Shareholders are herewith advised that Niveus has agreed, subject to approval by Niveus’s shareholders, to sell its
     interest in Niveus Invest 20 Proprietary Limited (“Niveus Invest 20”), which is the holding company of Niveus’
     41% holding in Alphawave Golf Proprietary Limited (“Alphawave”) to Hosken Consolidated Investments Limited
     (“HCI”) (“Alphawave Transaction”).

     In addition, Niveus’s subsidiary, La Concorde South Africa Proprietary Limited (“La Concorde”), has agreed to
     sell, subject to approval by Niveus’s shareholders, its interests in a portfolio of properties to subsidiaries of HCI
     (the “Properties Transaction” and together with the Alphawave Transaction, the “Proposed Transactions”).

2.   RATIONALE FOR THE PROPOSED TRANSACTIONS

     2.1. Alphawave Transaction

         Alphawave is a start-up company which requires significant capital investment for research and
         development of its assets and software. To date, Niveus has advanced significant shareholder funding to
         Alphawave. However, having regard to Niveus’ available reserves, Niveus believes that it is a prudent time
         to accept the offer received from HCI for the shares in and loan claims in Niveus Invest 20, which will result
         in Niveus receiving a guaranteed repayment of all loan amounts advanced by it to date and remove the
         obligations of Niveus to advance further funding to Niveus Invest 20 and Alphawave in the future.

     2.2. Properties Transaction

         La Concorde previously owned and operated the KWV business, which was sold to Warshay Investments
         and the Vasari Group during 2016. Since then, La Concorde has predominantly held certain properties as
         investment properties, some of which are let to third parties. HCI has approached La Concorde with an
         offer to acquire certain of the properties and property owning entities, which offer La Concorde has
         accepted, subject to Niveus shareholder approval and the conditions precedent stipulated in paragraph 4.3
         below. La Concorde does not have the expertise or resources to unlock value in the property assets, and
         believe that the offer received from HCI for the property assets will provide a satisfactory return on such
         properties in a particularly difficult market.

3.   ALPHAWAVE TRANSACTION

     3.1. Description of Alphawave

         Niveus currently holds all of the issued shares in and claims against Niveus Invest 20. Niveus Invest 20
         owns no assets other than shares in and loan claims against Alphawave. Alphawave is a start-up company
         that develops radar tracking products in the golf industry.

     3.2. Particulars of the Alphawave Transaction

         In terms of the Alphawave Transaction, Niveus will sell to HCI all of the issued share capital of Niveus
         Invest 20, and all claims owing by Niveus Invest 20 to Niveus.

         The consideration payable by HCI to Niveus in respect of the claims owing by Niveus Invest 20 to Niveus
         shall be the face value of the claims (including but not limited to loan claims) owing by Niveus Invest 20 to
         Niveus as at the effective date of the sale agreement. The face value of the loan claims owing by Niveus
         Invest 20 to Niveus as at the signature date of the sale agreement was approximately R38,195,000. Due
         to the significant loan claims owing by Niveus Invest 20 to Niveus, HCI will pay R1.00 for the shares in
         Niveus Invest 20.

     3.3. Conditions Precedent

         The Alphawave transaction is subject to, inter alia, the fulfilment or waiver of the following conditions
         precedent (“Alphawave Conditions Precedent”):

         -   the board of directors of the HCI unconditionally approving the Alphawave Transaction;

         -   the board of directors of Niveus unconditionally approving the Alphawave Transaction;

         -   the board of directors of Niveus Invest 20 adopting such resolutions as may be required in terms of its
             Memorandum of Incorporation to approve the transfer of its shares to HCI; and

         -   to the extent legally required, the shareholders of Niveus approving of the Alphawave Transaction in
             terms of the Listings Requirements of the JSE Limited (“JSE Listings Requirements”).

         The Alphawave Conditions Precedent must be fulfilled (or waived by the parties) by not later than 30
         September 2019, which date may be extended by mutual consent between the parties.

     3.4. Effective date

         The effective date of the Alphawave Transaction shall be the second business day following the date of
         fulfilment (or waiver) of the last of the Alphawave Conditions Precedent.

         Delivery of the shares in and claims against Niveus Invest 20 to HCI will be effected on the effective date,
         against payment of the purchase price.

     3.5. Financial information

         The value of the net assets of Niveus Invest 20 attributable to equity holders of Niveus at 31 March 2019
         was R22.186 million and the attributable headline loss for the 12 months then ended, was R7.057 million.

4.   THE PROPERTIES TRANSACTION

     4.1. Description of the assets to be sold

         The Niveus Group owns approximately 58% of the issued share capital of La Concorde Holdings Ltd, which
         in turn owns all of the issued shares in La Concorde. The assets of La Concorde consist mainly of interests
         in properties or property-owning entities, art and cash.

         The Properties Transaction comprises four separate but indivisible transactions in relation to four assets
         (collectively, the “Properties Sale Assets”), which may be summarised as follows:

         -   the La Concorde rental enterprise, comprising Erf 8676, Paarl, Western Cape, measuring 25,849
             square meters together with all buildings, erections and improvements thereon, held under deed of
             transfer number: T25931/1976, together with all leases, contracts, fixed assets, intellectual property,
             accounts receivable, business information and goodwill associated therewith (“La Concorde Rental
             Enterprise”);

         -   the Picardi farm business, comprising Erf 31366, Picardi Farm, Paarl, Western Cape, Registration
             Division IR, Province of Western Cape, measuring 160,400 square meters together with all buildings,
             erections and improvements thereon, held under deed of transfer number: T34489/2011, the Picardi
        Agreement (as defined below), fixed assets, intellectual property, accounts receivable and goodwill
        associated with the business (“Picardi Farm Business”);

    -   the Poel garage rental enterprise, comprising Erf 8677, Paarl, Western Cape, Western Cape,
        Registration Division IR, Province of Western Cape, measuring 24,702 square meters together with all
        buildings, erections and improvements thereon, held under deed of transfer number: T25931/1976,
        together with all leases, contracts, fixed assets, intellectual property, accounts receivable, business
        information and goodwill associated therewith (“Poel Garage Rental Enterprise”); and

    -   La Concorde’s shares in and claims in La Concorde Builders Precinct Proprietary Limited (“Builders
        SPV”), comprising 75% of the total issued share capital of and shareholder loan claims against Builders
        SPV (“Builders SPV Equity”). Builders SPV which in turn will own Erf 11919, De Hoop Farm, Paarl,
        Western Cape, Registration Division IR, Province of Western Cape, measuring 3.2971 ha, held under
        deed of transfer number, T40136/1974 at the Effective Date.

4.2. Particulars of the Properties Transaction

    In terms of the Properties Transaction, La Concorde will sell the Properties Sale Assets to four separate
    subsidiaries of HCI. In terms of the sale agreement, HCI irrevocably undertakes to procure compliance by
    each of its subsidiaries with the terms of the sale agreement.

    The consideration payable (“Properties Purchase Consideration”) for the Properties Transaction will be:

    -   an amount of R49,000,000 for the La Concorde Rental Enterprise;

    -   an amount of R6,000,000 for the Picardi Farm Business;

    -   an amount of R12,000,000 for the Poel Garage Rental Enterprise; and

    -   an amount of R 12,750,000 plus the face value of any claims held by La Concorde against Builders
        SPV on the effective date of the transaction, for the Builders SPV Equity.

4.3. Conditions Precedent

    The Properties Transaction is subject to, inter alia, the fulfilment (or waiver) of the following conditions
    precedent (the “Properties Conditions Precedent”):

    -   by no later than the date that is 30 calendar days after the signature date of the sale agreement, HCI
        having completed a due diligence investigation to its satisfaction (as determined by it in its sole and
        absolute discretion) and having given written notice thereof to La Concorde;

    -   by not later than 5 business days from the completion of the due diligence investigation, the board of
        directors of each of the purchasers approving the sale transactions in terms of the sale agreement;

    -   by not later than 31 July 2019, the board of directors of La Concorde adopting such resolutions as
        legally required to approve the execution and implementation of the sale transaction;

    -   by not later than 31 July 2019, the conclusion of a sale of shares and claims agreement between La
        Concorde and Bell Vue Developments (Pty) Ltd (“BVD”), in terms of which, inter alia, La Concorde
        sells 25% of the shares in the issued share capital of Builders SPV to BVD;

    -   by not later than 30 September 2019, the shareholders of Niveus approving the Properties Transaction
        in accordance with Sections 9 and 10 of the JSE Listings Requirements and proof thereof being
        provided to the purchasing parties;

    -   by not later than the date that is 2 months after the signature date of the agreement, La Concorde not
        having provided written notice to the purchasing entities that La Concorde wishes to resile from the
        sale agreement as a result of it having received and accepted a Third Party Offer (as defined and
        specified below);

    -   by not later than 30 September 2019, the purchasers of each of the La Concorde Rental Enterprise,
        the Poel Garage Rental Enterprise and the Picardi Farm Business being registered as a VAT vendor
        in terms of the Value Added Tax Act, with effect from the effective date (or any date before that date);

    -   by not later than 30 September 2019, the conclusion of an agreement with Vititec Proprietary Limited
        relating to the management of the farming operations on the Picardi Farm (“Picardi Agreement”), on
        terms reasonably acceptable to the relevant HCI subsidiary purchaser, and such agreement becoming
        unconditional in accordance with its terms;

    -   by not later than 30 September 2019, all parties being satisfied that La Concorde is capable of giving
        vacant occupation of the Picardi Farm to the relevant purchaser on the effective date and that no
        person shall have any right of occupation of any portion of the Picardi Farm after the effective date;

    -   by not later than 30 September 2019, the written consent by each of the counterparties to certain
        material leases defined in the sale agreement to the assignment of such leases to the relevant HCI
        subsidiary purchaser, in the form and on terms and conditions acceptable to the relevant HCI
        subsidiary purchaser, or alternatively the conclusion of new lease agreements in respect of the relevant
        premises subject to the material leases.

    The Properties Conditions Precedent must be fulfilled (or waived in accordance with the sale agreement)
    by not later than the dates specified above, which dates may be extended by mutual consent between the
    parties.

4.4. Third Party Offers

    HCI, the HCI subsidiary purchasers and La Concorde have agreed that, for a period of 2 months
    commencing on the signature date of the sale agreement, La Concorde will be entitled to invite interested
    third parties to submit binding offers to acquire all (but not only some) of the Properties Sale Assets (“Third
    Party Offer”).

    During the Third Party Offer period, should La Concorde receive a binding offer to acquire all (but not only
    some) of the Properties Sale Assets from a third party dealing bona fide and at arm’s length (“Third Party
    Offeror”), then La Concorde shall be entitled (but not obliged) to resile from the sale agreement and accept
    such an offer, provided that La Concorde provides proof in the form reasonably acceptable to the HCI
    subsidiary purchasers that:

    -   the Third Party Offeror offers to purchase all (but not some) of the Properties Sale Assets for an
        aggregate purchase price of not less than the aggregate Properties Purchase Consideration plus 5%
        of the aggregate Properties Purchase Consideration;

    -   the offer is in the form of a binding sale agreement and is on the terms and subject to such conditions
        which are no less favourable to La Concorde than the terms and conditions contained in the sale
        agreement, and may be subject to conditions, but may not include any conditions in addition to the
        Properties Conditions Precedent; and

    -   the Third Party Offeror has provided proof to La Concorde that it has sufficient capital and/or funding
        available to it to enable it to settle the full purchase price payable for the Properties Sale Assets.

    Interested third parties may contact the offices of La Concorde if they wish to submit a Third Party Offer.
     4.5. Effective date

       The effective date of the Property Sales Agreement shall be the date on which the properties comprising the
       La Concorde Rental Enterprise, the Picardi Farm Business and the Poel Garage Rental Enterprise are
       transferred to the HCI subsidiary purchasers, which shall be as soon as possible after fulfilment (or waiver) of
       the Properties Conditions Precedent.

       Payment of the Property Purchase Consideration shall be made against transfer and delivery on the effective
       date, subject to simultaneous cancellation of and/or release from any and all mortgage bonds registered in
       respect of the properties.

     4.6. Financial information

       The value of the net assets of the Properties Sale Assets attributable to equity holders of La Concorde at 31
       March 2019 was approximately R85,200,000 and the attributable loss for the 12 months then ended, was
       approximately R31,617,000 (headline profit of R1.501 million excluding fair value adjustments).

5.   USE OF PROCEEDS

     No immediate plans exist for the application of the proceeds and any cash received will initially be retained by
     the Niveus group, subject to the decisions of the relevant board of directors.

6.   CLASSIFICATION OF THE PROPOSED TRANSACTIONS

     As the aggregated value of the Alphawave Transaction and the Properties Transaction exceed 30% of Niveus’
     market capitalisation, it meets the definition of a category 1 transaction as contemplated in section 9 of the JSE
     Listings Requirements and accordingly is required to be approved by an ordinary resolution of the shareholders
     of Niveus.

     HCI and the HCI subsidiary purchaser are related parties to Niveus due to the fact that HCI is a material
     shareholder of Niveus and Niveus’ holding company. The Proposed Transactions are therefore related party
     transactions in terms of section 10 of the JSE Listings Requirements and will require a fairness opinion to be
     prepared by an independent expert and the approval of the Niveus shareholders by an ordinary resolution of
     shareholders excluding HCI and its associates.

7.   CIRCULAR

     A circular containing the full details of the Proposed Transactions, incorporating a notice convening the required
     Niveus general meeting and a copy of the fairness opinion and other required documentation, will be posted to
     shareholders in due course and the salient dates and times of the Proposed Transactions, including the date of
     the shareholders meeting, will be announced on SENS in due course.



 Cape Town

 1 July 2019



 Financial Advisor and Sponsor: Investec Bank Limited

 Legal Adviser: ENSafrica

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