RIGHTS OFFER DECLARATION ANNOUNCEMENT AND REVISED DATES AND TIMES
ADvTECH Limited
(Incorporated in the Republic of South Africa)
(Registration number 1990/001119/06)
Share Code: ADH
ISIN: ZAE000031035
("ADvTECH" or the "Company")
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR ANY OTHER JURISDICTION IN RESPECT OF WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, OF THIS ANNOUNCEMENT WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION OR IN RESPECT OF WHICH THE OFFERING CONTEMPLATED BY THIS ANNOUNCEMENT IS UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO PURCHASE, OTHERWISE ACQUIRE, SUBSCRIBE FOR, SELL, OTHERWISE DISPOSE OF OR PURCHASE ANY SECURITY IN ANY JURISDICTION.
RIGHTS OFFER DECLARATION ANNOUNCEMENT AND REVISED DATES AND TIMES
INTRODUCTION
ADvTECH shareholders are referred to the announcement released on the Stock Exchange News Service ("SENS") on Monday, 7 September 2015 in which the Company declared its intention to undertake a renounceable rights offer to its shareholders ("rights offer") to raise up to R850 million. A condition precedent to the rights offer requires that the special resolutions which approved the increase of authorised share capital and amendments to Memorandum of Incorporation be registered with the Companies and Intellectual Property Commission ("CIPC"). Confirmation of registration has not yet been received from CIPC and as such the timetable below has been amended to facilitate the confirmation of registration.
BACKGROUND TO AND RATIONALE FOR THE RIGHTS OFFER
ADvTECH shareholders were advised in the ADvTECH Group's interim results for the six months ended 30 June 2015 that the board was considering the optimal capital structure for the ADvTECH Group and formulating a financing strategy that would allow the Group to support an accelerated growth strategy in the most efficient manner.
To implement the rights offer, the Company was required to obtain shareholder approval to increase its authorised but unissued share capital and to place sufficient unissued shares under the control of the Board to undertake the rights offer. This shareholder approval was obtained on Tuesday, 13 October 2015.
Central to the Board's strategy are the sustained and consistent growth of operations both locally and in sub-Saharan Africa and development of the present project pipeline. The acquisition of the Gaborone International School in Botswana concluded earlier this year signalled the Company's intent to pursue growth opportunities outside South Africa, while implementation of the acquisition of the Centurus and Maravest Schools groups alongside organic growth initiatives have materially increased ADvTECH's schools footprint within the country. The Tertiary division has resumed a growth strategy and is developing new organic and acquisitive investment opportunities in this sector.
As a result of ADvTECH's standard working capital cycle and seasonal cash variations, ADvTECH's borrowings are expected to increase from ZAR1.7 billion to ca. ZAR1.9 billion by calendar year end, assuming the addition of no new projects beyond the previously announced ZAR3.0 billion rolling capital expansion programme ("the announced programme").
Current ADvTECH Group debt facilities total ca. ZAR1.8 billion consisting of a Bridge Facility, a Revolving Credit Facility ("RCF") and an Overdraft Facility.
The ZAR350 million RCF has been fully drawn to fund capital work in progress;
The RCF is complemented by an overdraft facility with a current limit of ZAR122 million; and
The Bridge Facility of ZAR1 350 million has been fully utilised for capital expenditure and recent acquisitions.
Covenants in place allow for indebtedness of ZAR1.9 billion, leaving limited headroom to pursue incremental growth opportunities above and beyond the announced programme. At present management has identified near-term organic and acquisitive-led investment opportunities totalling almost ZAR1.0 billion that are over and above the board-approved projects already recorded.
Aside from creating a flexible capital structure that will enable the Company to pursue accelerated growth opportunities most efficiently, the Board believes it necessary to refinance existing facilities so as to reflect more accurately the seasonality of its funding requirements, improve the match between the nature of investment and the sources of capital, and lower its overall cost of capital.
With this in mind, and having reviewed in detail its financing options, the Board has decided to pursue a capital increase by way of a rights offer of up to ZAR850 million. Funds raised will be used to reduce and restructure current indebtedness, fund capital projects and planned acquisitions and ensure that ADvTECH is adequately positioned to execute on further growth opportunities identified from evaluation of the growing deal flow available at present.
THE RIGHTS OFFER
3.1 SALIENT TERMS
In terms of the rights offer, 75,555,556 new ADvTECH ordinary shares ("rights offer shares") will be offered to ADvTECH shareholders recorded in ADvTECH's share register at the close of business on Friday, 20 November 2015 ("record date"), at a subscription price of R11.25 cents per rights offer share, in the ratio of 16.59818 rights offer shares for every 100 ADvTECH ordinary shares held.
The subscription price per rights offer share represents a 10% discount to the 30 day volume weighted average price of ADvTECH ordinary shares listed on the JSE Limited ("JSE") as at the close of business on Wednesday, 21 October 2015, being the date on which the rights offer was priced.
Shareholders holding shares that are cum rights the last day to trade, being Friday, 13 November 2015, will be entitled to trade their rights in the form of letters of allocation. The letters of allocation will be listed and commence trading on the JSE on Monday, 16 November 2015. The relevant dates are set out in the table below.
The rights offer shares issued will rank pari passu with the existing issued ordinary shares of ADvTECH.
- REVISED SALIENT DATES AND TIMES
Notes:
All times shown in this circular are South African local times.
These dates and times are subject to change. Any material changes will be released on SENS.
Share certificates may not be dematerialised or rematerialised between Monday, 16 November 2015 and Friday, 20 November 2015, both days inclusive.
3.3 IRREVOCABLE UNDERTAKINGS AND UNDERWRITING COMMITMENTS
The following ADvTECH shareholders have irrevocably undertaken to follow their rights in terms of the rights offer as set out below:
In addition, the rights offer has been partially underwritten by Coronation and Visio Capital. In terms of the underwriting agreements, Coronation and Visio Capital have provided ADvTECH with irrevocable undertakings to underwrite 16,136,067 and 16,063,742 rights offer shares respectively, (being R362.2 million in aggregate).
In aggregate, the irrevocable undertakings and underwriting commitments cover 63,918,889 of the 75,555,556 rights offer shares, representing 88% of the shares being offered.
3.4 EXCESS APPLICATIONS
ADvTECH shareholders will have the right to apply for any excess rights offer shares not taken up by other shareholders subject to such rights being transferable upon renunciation of the letters of allocation, and any such excess shares will be attributed equitably, taking cognisance of the number of shares and rights held by the shareholder just prior to such allocation, including those taken up as a result of the rights offer, and the number of excess rights offer shares applied for by such shareholder.
3.5 FOREIGN SHAREHOLDERS
Introduction
Foreign shareholders may be affected by the rights offer, having regard to prevailing laws in their relevant jurisdictions. Such foreign shareholders should inform themselves about and observe any applicable legal requirements of such jurisdiction in relation to all aspects of the rights offer circular that may affect them, including the rights offer. It is the responsibility of each foreign shareholder to satisfy himself as to the full observation of the laws and regulatory requirements of the relevant foreign jurisdiction in connection with the rights offer, including the obtaining of any governmental, exchange or other consents or the making of any filing which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes or other requisite payments due in such jurisdiction. The rights offer is governed by the laws of South Africa and is subject to applicable laws and regulations, including the Exchange Control Regulations.
Affected foreign shareholders
Any ADvTECH shareholder who is in doubt as to his position with respect to the rights offer in any jurisdiction, including, without limitation, his tax status, should consult an appropriate independent professional advisor in the relevant jurisdiction without delay. Foreign shareholders are reminded that they may dispose of their ADvTECH ordinary shares on or prior to the last day to trade, in which case they will not participate in the rights offer.
Foreign shareholders accordingly must take their own advice on whether they are entitled, after the rights offer, to continue beneficially to hold any ADvTECH ordinary shares distributed to them and take the appropriate action in accordance with that advice.
Note to U.S. shareholders
The rights offer shares will not be registered with the U.S. Securities and Exchange Commission ("SEC") under the U.S. Securities Act of 1933, as amended, or any U.S. state securities laws. Neither the SEC nor any U.S. federal or state securities commission has registered, approved or disapproved the rights offer shares or passed comment or opinion upon the accuracy or adequacy of the circular to be issued by ADvTECH in respect of the rights offer. Any representation to the contrary is a criminal offence in the U.S.
ADvTECH shareholders who are citizens or residents of the U.S. are advised that the rights offer shares have not been and will not be registered under the U.S. Securities Exchange Act of 1934, as amended.
Sale of letters of allocation
It is the responsibility of any person outside the common monetary area (including, without limitation, nominees, agents and trustees for such persons) wishing to take up rights offer shares under the rights offer, to satisfy themselves as to full observance of the applicable laws of any relevant territory, including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories.
If a premium can be obtained over the expenses of the sale, the rights of ADvTECH shareholders in the jurisdictions in which it is illegal to make an offer will be sold by the transfer secretaries on the JSE for the benefit of such ADvTECH shareholders, in accordance with this section. Any premium over the expenses of the sale of the rights of ADvTECH shareholders in these jurisdictions (including applicable taxes, brokerage fees and commissions) shall be remitted to such ADvTECH shareholders.
None of ADvTECH, the transfer secretaries or any broker appointed by them or ADvTECH, will have any obligation or be responsible for any loss or damage whatsoever in relation to, or arising out of, the timing of such sales or the remittance of the net proceeds of such sales.
3.6 DISTRIBUTION OF CIRCULAR
ADvTECH shareholders are advised that a circular containing full details of the rights offer will be posted on the dates set out in paragraph 3.2 above.
Johannesburg
3 November 2015
Sole bookrunner, financial advisor and transaction sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking Division)
Legal adviser
Cliffe Dekker Hofmeyr
Sponsor
Bridge Capital Advisors Proprietary Limited