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OMNIA HOLDINGS LIMITED - Posting of notice of general meeting

Release Date: 25/06/2019 08:15
Code(s): OMN     PDF:  
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Posting of notice of general meeting

OMNIA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1967/003680/06
JSE code OMN
ISIN ZAE000005153
("Omnia" or the "Group" or the "Company")


POSTING OF NOTICE OF GENERAL MEETING


1.     Posting of notice of general meeting

       Omnia shareholders are referred to the announcement released on the Stock Exchange News Service
       ("SENS") of the JSE Limited ("JSE") on Tuesday, 23 April 2019 wherein the Company advised that
       it had engaged in a collaborative process with its principal debt providers to devise and implement a
       restructuring of its existing debt, and the subsequent SENS announcement released on Thursday,
       30 May 2019, wherein the Company stated its intention to raise R2 billion by means of a fully
       underwritten rights offer to its shareholders (the "rights offer").

       Omnia will post a notice of general meeting to its shareholders on Wednesday, 26 June 2019, in order
       to convene a general meeting of shareholders to be held at 09:00 on Thursday, 25 July 2019
       (the "general meeting") at the Company's registered office, being Omnia House, Epsom Downs
       Office Park, 13 Sloane Street, Epsom Downs, Bryanston, 2021, to consider, and if deemed fit pass,
       with or without modification, special resolutions to:

       -   increase the authorised share capital of the Company;
       -   grant the directors of the Company the authority to issue additional Omnia shares in excess of 30%
           of Omnia's current issued share capital; and
       -   grant the directors the authority to authorise the Company to provide direct or indirect financial
           assistance, by way of a loan, guarantee, the provision of security or otherwise, to Umongo
           Petroleum Proprietary Limited, Omnia Group Proprietary Limited and any wholly-owned
           subsidiary, including in relation to the restructured debt package.

       These resolutions are required in order for the Company to be able to give effect to the capital
       restructure, including the proposed rights offer (the "required resolutions"), as further described
       below.

2.     Rationale for the rights offer

       The Company's objectives when managing capital are to safeguard its ability to continue as a going
       concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain
       an optimal capital structure to reduce the cost of capital.

       In order to maintain or adjust the capital structure, the Company may adjust the dividends paid to
       shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. The
       Company monitors capital on the basis of net interest-bearing borrowings over adjusted EBITDA. The
       Company aims to keep this ratio at 2.0x – 3.0x in the medium-term and below 2.0x in the long-term,
       measured at year-end.
                                                                                 2019            2018
                                                                                   Rm              Rm
       Net interest-bearing borrowings at 31 March                              4 403           2 542
       Adjusted EBITDA for the financial year ended 31 March                    1 137           1 464
       Ratio                                                                     3.9x            1.7x

       The Company leveraged its balance sheet in its 2017, 2018 and 2019 financial years as part of a
       strategic growth initiative, which included:

       -    expansion through the acquisitions of Umongo Petroleum (December 2018) and Oro Agri (May
            2019), and making market entries into new jurisdictions;
       -    investment in the new nitrophosphate plant; and
       -    investment in the Microsoft Dynamics AX system and related infrastructure.

       At 31 March 2019, the Company had reached the end of its expansionary capital expenditure programme
       and therefore capital expenditure will reduce significantly in the medium-term.

       In the 2019 financial year, the Company was adversely impacted by droughts, late rains, a volatile Rand, 
       a material slowdown in the local and international mining industry, and overall difficult trading conditions, 
       resulting in a net loss after tax of R407 million.  Increased working capital requirements, following the 
       recent acquisitions, were funded through a combination of borrowings and bank overdraft facilities.

       The net loss after tax, together with the increase in the Company's debt levels, was not in line with the
       Company's principal debt providers' expectations and covenant requirements. The Company
       proactively engaged with its debt providers and, by 31 March 2019, the debt providers agreed to waive
       all potential rights of default on existing loan facilities (disclosed as current interest-bearing borrowings
       and bank overdrafts on the balance sheet) on condition that new debt terms be agreed before 25 June
       2019.

       The Company has now secured a R6.8 billion bridge debt facility with its principal debt providers,
       comprised of a term loan of R5 billion, and committed overdraft and other facilities of R1.8 billion (the
       "bridge debt facility"). This bridge debt facility allowed the Company to settle all existing borrowings
       and overdraft facilities at 24 June 2019.

       While the bridge debt facility provides the Company with the liquidity it requires in the short term, the
       Company's debt levels remain high. In order to ensure the Company's long-term sustainability, the
       Company intends to make a rights offer of R2 billion to existing shareholders as an immediate solution
       to strengthen the capital structure. Proceeds from the rights offer will be used to partly repay the bridge
       debt facility. The rights offer will reduce debt levels to be within the Company's targeted range, thereby
       affording the Company access to undrawn debt facilities and reducing the Company's cost of capital.

       The remainder of the bridge debt facility, after reduction by the proceeds of the rights offer, is expected
       to be refinanced into a structured term loan and working capital debt package.

       Omnia has engaged with its major shareholders and has to date received supportive feedback regarding
       the rationale for the capital restructure and de-gearing exercise. The Company has received signed letters
       of support from shareholders and asset managers in respect of approximately 58% of Omnia's voting
       shares as at the last practicable date for the posting of the notice of general meeting, to vote in favour of
       the required resolutions or to recommend to their clients that they vote in favour of the
       required resolutions, as applicable, to enable the rights offer to take place.

3.     Standby underwriting agreement

       The Company has entered into a standby underwriting agreement with Absa Bank Limited, Investec Bank Limited, 
       Rand Merchant Bank (a division of FirstRand Bank Limited) and The Standard Bank of South Africa Limited 
       (together, the "joint bookrunners"), which have undertaken to severally underwrite 25% of the proposed rights 
       offer each (the "standby underwriting agreement"). In terms of the standby underwriting agreement, the 
       joint bookrunners may at any time appoint sub-underwriters to underwrite all or part of their underwriting 
       commitment.

       Shareholders should note that (i) a failure to approve the required resolutions at a general meeting
       within 45 days of the signature date of the standby underwriting agreement and/or (ii) a termination or
       cancellation of the standby underwriting agreement would constitute an event of default under the
       bridge debt facility, which would require the Company to find another method of restructuring and
       reducing its overall debt.

4.     Salient dates and times

                                                                                                        2019
       Record date for the posting of the notice to shareholders                             Friday, 21 June
       Notice of general meeting posted to shareholders on                                Wednesday, 26 June
       Last day to trade in order to be eligible to attend and vote at the
       general meeting                                                                      Tuesday, 16 July
       Records date for attending and voting at the general meeting                          Friday, 19 July
       Last day to lodge proxy forms (by 09:00) (for administrative purposes)                Monday, 22 July
       General meeting of shareholders at 09:00 on                                         Thursday, 25 July
       Results of general meeting released on SENS on                                      Thursday, 25 July
       Results of general meeting published in the press on                                  Friday, 26 July


       Notes:
       All dates and times above are local dates and times in South Africa, and are subject to change. Any
       changes will be announced on SENS.

25 June 2019


Financial advisor and transaction sponsor
Java Capital


Legal advisor
Webber Wentzel

Date: 25/06/2019 08:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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