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Firm Intention Announcement, Proposed Delisting and Withdrawal of Cautionary
ADRENNA PROPERTY GROUP LIMITED
Incorporated in the Republic of South Africa
Registration Number 1998/012245/06
Share Code: ANA ISIN Number: ZAE000187407
("Adrenna" or "the Company")
FIRM INTENTION ANNOUNCEMENT REGARDING:
- AN OFFER TO ADRENNA SHAREHOLDERS TO REPURCHASE THEIR ADRENNA SHARES;
- THE PROPOSED DELISTING OF ADRENNA FROM THE JSE; AND
- A WITHDRAWAL OF CAUTIONARY
1. INTRODUCTION
1.1. Further to the first cautionary announcement relating to the proposed delisting of the
Company, as published on 26 June 2019 ("Cautionary Announcement"), the board of
directors of Adrenna ("Board") is pleased to announce that it has resolved to propose
the terms and conditions of a cash offer to repurchase all the ordinary shares in Adrenna,
other than those held by the shareholders identified in paragraph 3.3 below ("Excluded
Shareholders"), in accordance with section 48 of the Companies Act, No. 71 of 2008, as
amended ("Companies Act"). The offer ("Scheme Offer") will be implemented by way
of a scheme of arrangement ("Scheme") in terms of section 114(1)(e) of the Companies
Act, to be proposed by the Board between Adrenna and its shareholders, which, if
successfully implemented, will be followed by the delisting of the Company from the Main
Board of the JSE Limited ("JSE") in terms of paragraph 1.17(b) of the JSE Listings
Requirements ("Delisting").
1.2. The contents of this announcement constitute a firm intention by the Company to make
the Scheme Offer, as contemplated in Chapter 5 of the Companies Act and Chapter 5
of the Companies Regulations, 2011, promulgated under the Companies Act (which
includes the Takeover Regulations issued pursuant to sections 120 and 223 of the
Companies Act) ("Companies Act Regulations").
2. THE SCHEME
2.1 Salient terms of the Scheme
2.1.1. The Scheme will be proposed by the Board between Adrenna and the
shareholders of Adrenna, other than the Excluded Shareholders (the "Eligible
Shareholders").
2.1.2. The consideration payable by the Company to Eligible Shareholders, if the
Scheme becomes operative, will be R1.30 per Scheme Share (as defined in
paragraph 3.4 below) ("Scheme Consideration"), payable in cash on the date on
which the Scheme becomes operative.
2.1.3. The Scheme Consideration represents a 63.21% premium to the 30-day volume
weighted average traded price ("VWAP") of 79.65 cents per share traded on the
JSE up to 25 June 2019, being the last business day immediately prior to the date
of the first cautionary announcement, and a 35.06% premium to the 30-day VWAP
of 96.25 cents per share traded on the JSE up to 15 August 2019, being the last
practicable date prior to the date of this announcement.
2.1.4. The Scheme is subject to the fulfilment or waiver (as the case may be) of the
conditions set out in paragraph 2.5 below.
2.1.5. In the event that the Scheme becomes operative, the listing of Adrenna's shares
on the Main Board of the JSE will be terminated and Eligible Shareholders,
excluding those Eligible Shareholders who validly exercised their appraisal rights in
accordance with section 164 of the Companies Act as a consequence of the
approval of the Scheme and whose shareholder rights have not been reinstated
as envisaged in sections 164(9) and 164(10) of the Companies Act or who have
not been ordered by any South African High court (the "Court") to withdraw their
demands in terms of section 164(15)(c)(v)(aa) of the Companies Act ("Scheme
Participants"), will be deemed to have disposed of all of their Scheme Shares at
the Scheme Consideration, such that Adrenna will acquire all the Scheme Shares
previously held by the Scheme Participants.
2.2 Rationale for the Scheme
Adrenna is a property company whose activities are focussed on the investment in
and growth of income producing developed properties. The Company was initially
listed on the Johannesburg Stock Exchange in January 1999 and, other than a
vendor placement in June 1999, has had no reason to resort to the market to raise
funds.
The directors of the Company have carefully evaluated the current situation and
concluded that for an entity which effectively only has a single asset, a commercial
industrial complex situated in Goodwood, Western Cape, with a total lettable area
of 41 975 square meters, a listing on the JSE is of no benefit to the Company or its
shareholders in that:
2.2.1 it increases the administrative burden on the Company and its executive;
2.2.2 it is not cost effective to the Company; and
2.2.3 it has not, because of the relatively small size of the Company, enhanced
the market image of the Company or the marketability of its shares in any way.
Furthermore, efforts during the past financial year to diversify the Company's
operations in order to enhance shareholder wealth have been delayed by the
onerous and costly compliance requirements associated with being a listed entity.
The directors have carefully weighed up alternatives available to the Company and
concluded that a delisting would be in the best interests of the Company and its
various stakeholders.
2.3 Mechanics of the Scheme
2.3.1 The Scheme constitutes an "affected transaction" as defined in section 117(1)(c)
of the Companies Act and accordingly will be regulated by the Companies Act,
the Companies Act Regulations and the Takeover Regulation Panel ("TRP").
2.3.2 The Scheme Offer will be effected by way of a scheme of arrangement in terms
of section 114(1)(e) of the Companies Act, proposed by the Independent Board,
as defined in paragraph 6.1 below, between the Company and its shareholders
in terms of which, if implemented, the Company will acquire all the shares held by
the Eligible shareholders for the Scheme Consideration of R1.30 per share.
2.4 Conditions to the Scheme
2.4.1 The Scheme is subject to the fulfilment of the following conditions precedent by
no later than Thursday, 31 October 2019, or such later date as may be determined
by the Company:
2.4.1.1 the Independent Board recommending to Adrenna shareholders,
without qualification that they vote in favour of the Scheme;
2.4.1.2 none of the irrevocable undertakings received from Adrenna
shareholders as referred to in paragraph 3 below ceasing for any reason
to be enforceable by the Company;
2.4.1.3 all regulatory approvals and/or consents as may be necessary to give
effect to the Scheme have been obtained (either unconditionally or
subject to conditions acceptable to the Company), including, without
limitation, the JSE, the TRP and the Financial Surveillance Department of
the South African Reserve Bank (in each case to the extent necessary);
2.4.1.4 approval of the Scheme by the requisite majority of Eligible
Shareholders, as contemplated in section 114, read with section 115, of
the Companies Act ("Scheme Resolution");
2.4.1.5 the Scheme Resolution has been passed and, to the extent required in
terms of section 115(3)(a) of the Companies Act, the implementation of
the Scheme Resolution is approved by the Court and, if applicable, the
Company has not elected to treat the Scheme Resolution as a nullity in
terms of section 115(5) of the Companies Act;
2.4.1.6 if the Scheme Resolution has been passed and any person who voted
against the Scheme Resolution applies to the Court within 10 (ten)
business days after the vote for a review of the Scheme in accordance
with the requirements of section 115(3)(b) of the Companies Act, (i) no
leave is granted by the Court to such person to apply to court for a
review of the Scheme in accordance with the requirements of section
115(6) of the Companies Act or (ii) if leave is granted by the Court to
apply to Court for a review of the Scheme in accordance with the
requirements of section 115(6) of the Companies Act, the Court has not
set aside the Scheme Resolution in terms of section 115(7) of the
Companies Act; and
2.4.1.7 the TRP has issued a compliance certificate in respect of the Scheme in
terms of section 119(4)(b) of the Companies Act.
2.4.2 The conditions precedent stipulated in paragraphs 2.4.1.3 to 2.4.1.7 are regulatory
in nature and may not be waived.
2.4.3 An announcement will be published on SENS and in the press as soon as
practicable after all the conditions to the Scheme have been fulfilled or waived,
as the case may be.
3. IRREVOCABLE UNDERTAKINGS
3.1 The Company has procured irrevocable undertakings from Eligible Shareholders holding
36.88% of the voting rights entitled to be exercised in respect of all the resolutions required
to approve the Scheme.
3.2 Each of the shareholders set out in the table below have undertaken to vote in favour of
all the resolutions required to implement the Scheme, where such Adrenna shareholder
is so permitted, as well as to accept the Scheme Offer:
% of voting rights
entitled to be
exercised in
respect of the
resolution required
No. of % of total issued to approve the
Shareholder shares share capital * Scheme #
Guscora Investments (Pty) Ltd 3 676 459 6.58% 18,27%
Propconsult (Pty) Ltd 3 744 250 6,70% 18,61%
TOTAL 7 420 709 13.28% 36,88%
* Based on 55 914 804 shares in issue as at the last practicable date prior to the
date of this announcement.
# Based on the number of Scheme Shares, as defined in paragraph 3.5 below.
3.3 Each of the Excluded Shareholders set out in the table below have, in respect of all or
part of their shareholding in Adrenna, undertaken to not accept the Scheme Offer and
will retain their investment in Adrenna post the Delisting:
% of total
No. of issued share
Shareholder Shares capital*
Diamond Edge Business Opportunities (Pty) Ltd 12 000 000 21,46%
Woodpecker International PCC Limited Cell 3 7 000 000 12,52%
Islandsite Investments Twenty-Three (Pty) Ltd 8 084 580 14,46%
R Fertig 598 612 1,07%
JNF Investment Trust 5 003 861 8.95%
JN Alcock 1 400 000 2,50%
WP Alcock 190 000 0,34%
Indsuez Management Declaration of Trust No1 1 514 180 2,71%
TOTAL 35 791 233 64,01%
* Based on 55 914 804 shares in issue as at the last practicable date prior to the date of
this announcement.
3.4 Adrenna and the Excluded Shareholders are concert parties in relation to the Scheme in
terms of Regulation 84 of the Takeover Regulations and have therefore made
declarations in the required form to Adrenna and the TRP, as required by Regulation 84(5)
of the Companies Regulations. The Excluded Shareholders are precluded from voting on
the Scheme.
3.5 Based on the irrevocable undertakings detailed in paragraph 3.3 above, the maximum
aggregate number of shares which may be repurchased by the Company under the
Scheme Offer for the Scheme Consideration will be 20 123 571 Adrenna shares ("Scheme
Shares"), amounting to a maximum aggregate cash consideration payable by the
Company of R26 160 642.30.
4. CASH CONFIRMATION TO THE TRP
Hutcheon Attorneys has, on behalf of Adrenna, delivered a cash confirmation, in compliance
with the TRP requirements, to the TRP for an amount of R26 500 000, in compliance with
Regulations 111(4) and (5) of the Companies Regulations, 2011, which is sufficient for the
purpose of fully satisfying the consideration payable in terms of the proposed Scheme.
5. SOLVENCY AND LIQUIDITY
The Board has concluded that Adrenna will (i) satisfy the solvency and liquidity test
contemplated in section 4 of the Companies Act immediately after completing the
repurchase by Adrenna of the Scheme Shares in terms of the Scheme and (ii) for purposes of
paragraph 5.69(c) of the Listings Requirements, that after considering the effect of the
repurchase, the provisions of section 4 and section 48 of the Companies Act have been
complied with and that:
5.1 Adrenna and its subsidiaries ("Group") will be able, in the normal course of business, to
pay their debts for a period of 12 months after the date of the repurchase;
5.2 the assets of Adrenna and the Group will exceed the liabilities of Adrenna and the Group
for a period of 12 months after the date of repurchase;
5.3 the share capital and reserves of Adrenna and the Group will be adequate for ordinary
business purposes for a period of 12 months after the repurchase; and
5.4 the working capital of Adrenna and the Group will be adequate for ordinary business
purposes for a period of 12 months after the repurchase.
6. INDEPENDENT BOARD, INDEPENDENT EXPERT REPORT AND RECOMMENDATIONS
6.1 The Board has constituted an independent board ("Independent Board") for the
purposes of the Scheme and advising Eligible Shareholders thereon as required by the
Regulations, 2011, promulgated under the Companies Act ("Companies Regulations").
The Independent Board comprises Mr M Moela, Ms SP Mothelesi, and Mr RS Watson.
6.2 The Independent Board has, in accordance with section 114(3) of the Companies Act
and regulation 90 of the Companies Act Regulations, appointed BDO South Africa as the
independent expert ("Independent Expert") acceptable to the TRP to provide it with
independent advice in regard to the fairness and reasonableness of the Scheme Offer
and to make appropriate recommendations to the Independent Board, for the benefit
of Adrenna shareholders.
6.3 The full substance of BDO's expert report in connection with the Scheme will be fully set
out in the circular to be posted to Eligible Shareholders as referred to in paragraph 8
below.
7. INTENTIONS REGARDING THE CONTINUATION OF THE BUSINESS AND THE BOARD
It is the intention of the Company that pursuant to the implementation of the Scheme:
7.1 Adrenna shall continue with its business;
7.2 the directors of Adrenna shall continue in office; and
7.3 the remuneration of the directors of Adrenna will not be affected by the Scheme.
8. DOCUMENTATION AND SALIENT DATES
Further details of the Scheme and the Delisting will be included in a circular to Adrenna
shareholders, which will contain, inter alia, the independent expert's opinion and the
recommendation of the Independent Board, the terms of the Scheme, pertinent dates relating
to the Scheme, a notice of the Scheme Meeting, a form of proxy and a form of surrender and
transfer in respect of the Scheme. The Circular is expected to be posted on or about 30 August
2019, subject to all the requisite approvals being received as contemplated in paragraph
2.4above. The salient dates in relation to the Scheme and the Delisting will be published on SENS
and in the press at the time of posting of the Circular.
9. RESPONSIBILITY STATEMENTS
The Board, including the Independent Board, accepts responsibility for the information
contained in this announcement insofar as it relates to Adrenna, the Scheme and the Delisting.
To the best of their collective knowledge and belief, the information contained in this
announcement is true and nothing has been omitted from this announcement which is likely
to affect the importance of the information.
10. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that, following publication of this announcement, the Cautionary
Announcement is hereby withdrawn and they are accordingly no longer required to exercise
caution when dealing in the Company's securities.
Johannesburg
21 August 2019
Designated Advisor
Arbor Capital Sponsors Proprietary Limited
Independent Expert
BDO South Africa
Date: 21/08/2019 07:05:00
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