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Disposal of AEEI’s Shareholding in SAAB Grintek Defence Proprietary Limited
AFRICAN EQUITY EMPOWERMENT
INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1996/006093/06
Share code: AEE ISIN:
ZAE000195731
("AEEI" or “the Company”)
DISPOSAL OF AEEI’S SHAREHOLDING IN SAAB GRINTEK DEFENCE PROPRIETARY LIMITED
1. Introduction
Shareholders are referred to the announcements released on SENS on 19 May 2015 and 26 November 2015
(collectively the “SGD Acquisition Announcements”).
Capitalised terms used in this announcement shall, unless otherwise indicated or appears from the context,
have the same meaning given to such terms in the SGD Acquisition Announcements.
In terms of the SGD Acquisition Announcements, Shareholders were advised of the acquisition by Bowwood
of 25% + 1 share (“Subject Shares”) in SAAB Grintek Defence Proprietary Limited (“SGD”) from SAAB South
Africa Proprietary Limited ("SAAB") in 2015 (“2015 SGD Acquisition”).
Shareholders are further referred to the announcement released on SENS on 22 September 2020 wherein
shareholders were advised that discussions between SGT and Bowwood had been mutually terminated in
respect of the subscription by SGT Solutions Proprietary Limited of 45% of the shares in Bowwood as a result
of SAAB providing correspondence to Bowwood that it intends to exercise the Call Option that it had in respect
of the Subject Shares when the 60-month period in the shareholders agreement concluded between SAAB
and Bowwood ("Shareholders Agreement") had lapsed.
Shareholders are hereby advised that SAAB exercised the Call Option in respect of the Subject Shares in
accordance with the terms of the Shareholders Agreement, and pursuant thereto SAAB, SGD and Bowwood
entered into a binding memorandum (“Closing Memorandum”) on 3 December 2020 which sets out the
terms of the disposal of the Subject Shares to SAAB at an agreed price of R150 million payable in cash (“SGD
Disposal”).
2. Nature of business
Bowwood was incorporated in South Africa as an investment holding entity whose sole investment was
the Subject Shares.
SGD is a leading South African defence and security company, bringing capabilities including electronic
warfare systems, sensor, technology, command and control, training systems, avionics, security and
support solutions to the African and international markets.
3. The rationale
The SGD Disposal is being undertaken to comply with Bowwood’s legal obligations in terms of the
agreements entered into in respect of the 2015 SGD Acquisition, which are further expanded upon in
paragraph 7 below.
4. Suspensive Conditions
The SGD Disposal as further elaborated in paragraph 7 below, is not subject to any suspensive
conditions.
5. Effective Date of the SGD Disposal
The effective date of the SGD Disposal is the date on which the Closing Memorandum was entered into,
being 3 December 2020.
6. Financial information
The value of the net assets that are the subject of the SGD Disposal as at 31 August 2020, being the last
financial year end of Bowwood, was R150 000 000. The loss before tax attributable to such net assets
for the year ended 31 August 2020 was R17 325 312, which loss arose primarily due to a revaluation
adjustment of the Subject Shares.
7. Implementation of the SGD Disposal
The terms of the Call Option are contained in the Shareholders Agreement entered into between SAAB,
Bowwood and SGD.
In terms of the Shareholders Agreement, the exercise price of the Call Option shall be the market value
of the Subject Shares as agreed by SAAB and Bowwood or failing agreement, such market price would
be determined by an independent valuer. Upon acceptance of the call notice, Bowwood shall have 30
days to effect the SGD Disposal, subject to regulatory approval.
The SGD Disposal is categorised as a category 1 transaction in terms of the JSE Listings Requirements,
requiring the issuance of a circular (“Circular”) to AEEI shareholders calling for a general meeting of
shareholders to obtain approval for the SGD Disposal.
Bowwood obtained a legal opinion about its rights and obligations under the Shareholders Agreement as
it was not possible to obtain AEEI shareholder approval within the timeframe set out in the Shareholders
Agreement for the implementation of the SGD Disposal.
Bowwood’s legal advisors advised, inter alia, that Bowwood as a subsidiary of AEEI is itself technically
not bound by the requirements of chapter 9 of the JSE Listings Requirements and Bowwood is thus legally
authorised, and bound, in terms of general company law and contract law to implement and would be
obliged to execute the SGD Disposal.
Notwithstanding that AEEI itself needs to obtain shareholder approval in relation to the SGD Disposal in
terms of the JSE Listings Requirements, Bowwood had no option but to implement the SGD Disposal. A
failure or refusal by Bowwood to do so would have exposed Bowwood to a substantial damages claim for
breach of contract. As stated above, Bowwood, SGD and SAAB have since entered into the Closing
Memorandum.
8. Classification of the SGD Disposal
AEEI however, in terms of good corporate governance, will comply as far as possible, with the JSE
Listings Requirements in respect of the SGD Disposal despite Bowwood implementing the SGD Disposal
prior to AEEI obtaining approval from its shareholders.
Sekunjalo Investment Holdings Proprietary Limited, a 61% shareholder in AEEI, has indicated it will
provide an irrevocable undertaking to vote in favour of the SGD Disposal.
In this regard, the SGD Disposal, as stated above, is classified as a Category 1 transaction in terms of
the JSE Listings Requirements and accordingly a circular giving full details of the SGD Disposal will be
distributed to shareholders within 60 (sixty) days.
The Company has notified the JSE of the events surrounding the 2015 SGD Acquisition and the
subsequent SGD Disposal.
Cape Town
7 December 2020
Joint Sponsor
Vunani Sponsors
Joint Sponsors
Merchantec Capital
Date: 07-12-2020 07:30:00
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