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HUGE GROUP LIMITED - Publication of Circular and Notice of General Meeting

Release Date: 29/01/2020 14:35
Code(s): HUG     PDF:  
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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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