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Settlement with Group Wreck Vendors and Specific Share Repurchase
Insimbi Industrial Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2002/029821/06)
Share code: ISB ISIN: ZAE000116828
(“Insimbi” or “the Company”)
SETTLEMENT WITH GROUP WRECK VENDORS AND SPECIFIC SHARE REPURCHASE
1. INTRODUCTION
Shareholders are referred to the various SENS announcements released by Insimbi, the last
of which was released on 16 November 2018, in respect of the acquisition by Insimbi, through
its wholly-owned subsidiary, Amalgamated Metals Recycling Proprietary Limited (“AMR”) of
90% of the shares in Group Wreck International Non-Ferrous Proprietary Limited (“Group
Wreck”) for a total purchase consideration of R120 million (“the Acquisition”).
Subsequent to the Acquisition and specifically in the financial year ending 28 February 2021,
Insimbi identified a number of alleged warranty claims against Ella Rose Property and
Investments Proprietary Limited, Repo Metals Holdings Proprietary Limited and Solimene
Holdings Proprietary Limited (“the Vendors”) and their affiliates in the amount of R12,339,882
(“Warranty Claim”). Furthermore, as a result of a number of factors, including the impact on
the economy by the Covid-19 restrictions, coupled with the ban on exports of both ferrous and
non-ferrous recycled metals which was implemented by the local SA authorities as a result of
the pandemic, the business of Group Wreck has been severely adversely affected and it has
become clear to all parties that Group Wreck will not achieve its anticipated profit targets within
the 3 year and 4 year period post the Acquisition.
Given that Group Wreck is unlikely to achieve its profit targets, the parties have agreed to
settle the Warranty Claim and accelerate the profit target remedy measures set out in the
Acquisition agreement and, as a result, have agreed to enter into a settlement agreement, in
terms of which Insimbi will repurchase the 18 461 538 Insimbi shares from the Vendors for
R150 000 (“the Repurchase”), reduce the loan made to AMR by the Vendors by an amount
equal to the Warranty Claim, adjusted for interest, and acquire the remaining 10% of the
shares in Group Wreck that it does not already own for R350 000 (“the Settlement”).
The Repurchase constitutes 4.2% of the issued share capital of Insimbi (excluding treasury
shares) at a price of R0.008125 per Insimbi share (“Repurchase Price”).
The Repurchase Price represents a discount of 98.6% to the volume weighted average trading
price at which Insimbi’s shares traded on the JSE Limited (“JSE”) over the 30 trading days up
to and including 8 February 2021.
The Repurchase Price will be paid in cash by Insimbi to the Vendors.
The Settlement is subject to the fulfilment of a number of outstanding suspensive conditions,
including:
- Insimbi shareholders approving the Repurchase as required by paragraph 5.69(b) of
the Listings Requirements of the JSE (“JSE Listings Requirements”), by way of a
special resolution at a meeting called for that purpose; and
- Insimbi obtaining all regulatory approvals required for the implementation of the
Repurchase.
2. EFFECTIVE DATE OF THE SPECIFIC REPURCHASE
In terms of the Settlement, the effective date of the Repurchase will be the third business day
after the date on which the last of the suspensive conditions have been fulfilled or waived,
which date is anticipated to be no later than 31 March 2021, or such later date that the parties
may agree in writing.
3. REQUIRED SHAREHOLDER APPROVAL
In terms of the JSE Listings Requirements, the Repurchase constitutes a specific repurchase
which requires the approval by way of a special resolution of shareholders of Insimbi present
or represented at a general meeting (“General Meeting”).
4. PRO FORMA FINANCIAL EFFECTS
The Company will release a further announcement on SENS to advise shareholders of the
pro forma financial effects of the Settlement in due course.
5. CANCELLATION AND DELISTING OF THE REPURCHASE SHARES
The Repurchase shares will be cancelled by the Company and, in accordance with section
35(5) of the Companies Act, 2008 become part of the authorised share capital of Insimbi.
Accordingly, the Repurchase has no impact on the treasury shares held by the Company,
which equates to 26 337 468 shares.
The Repurchase shares represent 4.2% of the total issued share capital of Insimbi at the date
of this announcement. Subsequent to the approval of the Repurchase at the General Meeting
and the implementation of the Settlement, the Repurchase shares will be cancelled and
delisted.
6. CIRCULAR AND GENERAL MEETING
A General Meeting of the shareholders of Insimbi will be held to consider and, if deemed fit,
to pass, with or without modification, the resolutions required to approve the Repurchase. A
circular containing full details of the Repurchase set out in this announcement and convening
the General Meeting will be posted to shareholders in due course.
Johannesburg
9 February 2021
Sponsor
PSG Capital
Date: 09-02-2021 05:11:00
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