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Publication of Circular and Notice of General Meeting
HUGE GROUP LIMITED
(Registration number 2006/023587/06)
Share code: HUG ISIN: ZAE000102042
(“Huge” or “the Company”)
PUBLICATION OF CIRCULAR AND NOTICE OF GENERAL MEETING
1. PUBLICATION OF CIRCULAR
Huge takes pleasure in announcing that it has distributed a circular
(the Circular) to its Shareholders , which includes a Form of Proxy in
respect of the proposed specific issue of Options to JC Herbst (the
Chief Executive Officer), AP Openshaw (the Chief Operating Officer)
and SL Sequeira (the Chief Financial Officer) in terms of separate
Executive Option Agreements (the Proposed Transactions).
Terms that are capitalized in this announcement shall have the
meaning assigned to them in the Circular.
Copies of the Circular are available for inspection during normal
business hours at the premises of Huge at Unit 6, 1 Melrose Boulevard,
Melrose Arch, Johannesburg and on the website at
www.hugegroup.com/circulars.
The Circular contains information on the reasons for the Proposed
Transactions, detailed information on Huge and the actions to be
taken by Shareholders. Key sections of the Circular have been set out
below.
2. THE PROPROSED TRANSACTIONS
On 30 August 2019, Huge announced that it had concluded Executive
Option Agreements with the Executive Directors, which are subject to
Shareholder approval.
Each Executive Option Agreement contemplates the granting by the
Company to the relevant Executive Director of a right to subscribe for
a number of Designated Shares in the Company at a Strike Price equal
to the 30-day volume-weighted average price of a Huge ordinary
share on the Effective Date. The Options contemplated in each
Executive Option Agreement, if approved by Shareholders, will vest in
the relevant Executive Director in three equal annual tranches
commencing on 1 March 2020, in the following manner:
JC Herbst Option 1 Option 2 Option 2
Number of 2 500 000 2 500 000 2 500 000
Designated
Shares
Option Period 1 March 2020 1 March 2021 1 March 2022
to 28 to 28 to 28
February 2025 February 2026 February 2027
(both days (both days (both days
inclusive) inclusive) inclusive)
(Option 1 (Option 2 (Option 3
Option Option Option
Period) Period) Period)
Date of Beginning of Beginning of Beginning of
vesting the Option 1 the Option 2 the Option 3
Option Option Option
Period, being Period, being Period, being
1 March 2020 1 March 2021 1 March 2022
Strike Price at R5.31 per R5.31 per R5.31 per
date of vesting share share share
AP Openshaw Option 1 Option 2 Option 2
Number of 2 500 000 2 500 000 2 500 000
Designated
Shares
Option Period 1 March 2020 1 March 2021 1 March 2022
to 28 to 28 to 28
February 2025 February 2026 February 2027
(both days (both days (both days
inclusive) inclusive) inclusive)
Date of Beginning of Beginning of Beginning of
vesting the Option 1 the Option 2 the Option 3
Option Option Option
Period, being Period, being Period, being
1 March 2020 1 March 2021 1 March 2022
Strike Price at R5.31 per R5.31 per R5.31 per
date of vesting share share share
SL Sequeira Option 1 Option 2 Option 2
Number of 250 000 250 000 250 000
Designated
Shares
Option Period 1 March 2020 1 March 2021 1 March 2022
to 28 to 28 to 28
February 2025 February 2026 February 2027
(both days (both days (both days
inclusive) inclusive) inclusive)
Date of Beginning of Beginning of Beginning of
vesting the Option 1 the Option 2 the Option 3
Option Option Option
Period, being Period, being Period, being
1 March 2020 1 March 2021 1 March 2022
Strike Price at R5.31 per R5.31 per R5.31 per
date of vesting share share share
Upon an Option Settlement Date, the Executive Director may discharge
his or her obligations to the Company in respect of the Subscription
Consideration by effecting payment of the total Subscription
Consideration in cash; or by forfeiting a portion of the Options and
applying a Settlement Value to the full, or partial, settlement of the
Subscription Consideration, as the case may be.
Upon an Option Settlement Date, the Company may elect to discharge
its obligations to the Executive Director by either issuing the Subscription
Shares to the Executive Director or by paying a Cash Settlement Amount
to the Executive Director.
3. OTHER RELEVANT ASPECTS RELATING TO THE OPTIONS
In the event that the Executive Director ceases to be an employee of
the Company, the Executive Director shall forfeit any remaining
unexercised and vested Options (or a portion thereof), as well as any
Options that may not have vested.
Should the Company announce a merger, the Executive Director shall
be entitled to deliver an Option Exercise Notice in respect of all of the
Designated Shares relating to that Executive Director, whether or not
they had vested.
4. RATIONALE FOR THE PROPOSED TRANSACTIONS
The Executive Option Agreements are intended to reward the
Executive Directors for past performance, encourage future
performance and incentivise the Executive Directors to remain
employed by the Company.
5. FINANCIAL EFFECTS OF THE SPECIFIC ISSUE
The Strike Price of R5.31 is the 30-day volume-weighted average price
of a Huge Share on the Signature Date of the Executive Option
Agreements, being 29 August 2019. The Effective Price shall be the
volume-weighted average price of the share on the Option Exercise
Date.
The pro forma financial information has been disclosed in the Circular
and illustrates the impact of the Specific Issue on the reviewed
consolidated financial results of the Company for the six months ended
31 August 2019, had the Specific Issues occurred on 31 August 2019 for
Statement of Financial Position purposes and on 1 March 2019 for
Statement of Comprehensive Income purposes. The pro forma
financial effects have been prepared on the same basis as the
audited annual financial statements for the year ended 28 February
2019 (AFS). The AFS have been prepared in accordance with
International Financial Reporting Standards and the requirements of
the Companies Act 71 of 2008.
6. EFFECTIVE DATE OF THE PROPOSED TRANSACTIONS
The effective date of the Proposed Transactions will be the first Business
Day following the fulfilment of the Suspensive Conditions and is
expected to be no later than Friday, 28 February 2020.
7. CONDITIONS PRECEDENT
The Proposed Transactions are conditional upon:
a. the delivery by the Company to the Executives of a copy of an
ordinary resolution of the Shareholders of the Company
approving the terms and conditions of the Executive Option
Agreements passed at a General Meeting of Shareholders and
achieving a majority of at least 75%; and
b. the receipt of all regulatory approvals legally required for the
implementation of the Executive Option Agreements, either
unconditionally or subject to such conditions as are reasonably
acceptable to the Parties, including, without limitation, the
approval of the JSE to the extent legally required.
8. DETAILS OF THE EXECUTIVE DIRECTORS
The Executive Directors in respect of which the relevant Executive
Option Agreements relate are directors of Huge. Mr Herbst is the Chief
Executive Officer, having been appointed on 1 September 2006, Mr
Openshaw is the Chief Operating Officer, having been appointed on
1 March 2019 and Mrs Sequeira is the Chief Financial Officer, having
been appointed on 25 March 2019.
9. CATEGORISATION
The Proposed Transactions are related party transactions in terms of the
Listings Requirements of the JSE. Accordingly, a fairness opinion was
obtained in respect of the Proposed Transactions. The Company
appointed Moore Corporate Services Cape Town Proprietary Limited
(Moore) as the Independent Expert who opined on the fairness of the
Proposed Transactions.
10. NOTICE OF GENERAL MEETING
Notice is hereby given that the General Meeting of Shareholders will be
held on Wednesday, 26 February at 10h00 at Unit 6, 1 Melrose Boulevard,
Melrose Arch, Johannesburg.
The board of directors of the Company determined that, in terms of
section 62(3)(a), as read with section 59 of the Companies Act 71 of
2008 (as amended), the record date for purposes of determining which
Shareholders are entitled to receive the notice of the General Meeting
is Friday, 24 January 2020 and the record date for the purposes of
determining which Shareholders of the Company are entitled to
participate in and vote at the General Meeting is Friday, 21 February
2020. Accordingly, the last day to trade in the Company’s Shares in
order to be recorded in the register of Huge Shareholders to be entitled
to participate in and vote at the General Meeting will be Tuesday, 18
February 2020.
Shareholders are requested to lodge Forms of Proxy by 10h00 on
Monday, 24 February 2020 but will nevertheless be entitled to lodge
Forms of Proxy prior to the proxy exercising such Shareholder rights as a
Shareholder at the General Meeting.
Johannesburg
29 January 2020
Transaction Sponsor
Questco Proprietary Limited
Date: 29-01-2020 02:35:00
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