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PNC
PNC
PNC - Pinnacle - Pinnacle Repurchase from Amabubesi Technology Holdings (Pty)
Ltd and Withdrawal of Cautionary Announcement
PINNACLE TECHNOLOGY HOLDINGS LIMITED
Registration number 1986/000334/06
Share Code: PNC
ISIN: ZAE000022570
("Pinnacle" or "the Company")
ANNOUNCEMENT REGARDING THE REPURCHASE BY THE COMPANY AND ITS SUBSIDIARY OF
PINNACLE SHARES FROM AMABUBESI TECHNOLOGY HOLDINGS (PROPRIETARY) LIMITED
("AMABUBESI") TO BE IMPLEMENTED IN TERMS OF A SCHEME OF ARRANGEMENT, AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
1. INTRODUCTION
Further to the cautionary announcement released on SENS on Friday, 14 October
2011 and in the press on Monday, 17 October 2011, shareholders are advised that
Pinnacle was notified by Amabubesi on 12 October 2011 of its intention to
dispose of its entire shareholding in Pinnacle, comprising 17 281 647 ordinary
shares, which represents 10.4% of the issued shares in Pinnacle (net of treasury
shares). In accordance with the provisions of the subscription agreement
concluded between Amabubesi and Pinnacle on 3 March 2006 (in terms of which
Amabubesi originally acquired its Pinnacle shares), (the "subscription
agreement"). Amabubesi is required first to offer any such shares to Pinnacle
under the pre-emptive rights that Pinnacle has under that agreement. Amabubesi
has accordingly offered these shares to Pinnacle at a minimum price of R7.50 per
share (the "Offer").
The Board of the Company has resolved that Pinnacle will accept this offer and
will repurchase 11 482 801 of its own ordinary shares at R7.50 per share out of
its available share premium and Pinnacle Holdings Limited, a subsidiary of
Pinnacle will acquire 5 798 846 ordinary shares in Pinnacle at R7.50 per share,
both from Amabubesi, amounting to a total of 17 281 647 ordinary shares
purchased for and on behalf of the Pinnacle Group of Companies ("the Group")
(the "Repurchase") by means of a scheme of arrangement in terms of Section 114
of the Companies Act (Act 71 of 2008 as amended) ("the Act") as read with
Section 115 of the Act ("the Scheme"). The effective date of the Repurchase
will be the third business day after the fulfilment of all the conditions
precedent in paragraph 4 below. The special resolution needed for the Scheme is
expected to be tabled at a shareholders` meeting to be held on or about 6
January 2012.
2. RATIONALE FOR THE REPURCHASE
Amabubesi is desirous of selling its entire holdings of 17 281 647 ordinary
shares in Pinnacle due to the fund in which these shares were owned having
reached its investment horizon. As detailed above Pinnacle holds a pre-emptive
right over these shares giving it an effective right of first refusal should
Amabubesi decide to sell these shares. Amabubesi has offered a price of R7.50
per share which is 18.4% below its average traded price over the 30 business
days prior to Pinnacle accepting the Offer. If the Group were to have
completed the Repurchase on 1 July 2010 the resultant reduction in issued shares
(net of treasury shares) would have had the effect of increasing the pro-forma
earnings per share by 6.0% for the year ended 30 June 2011. The Board decided
to accept the Offer subject to shareholder approval, and to repurchase the full
17 281 647 shares offered, after reviewing the statement of financial position,
income statement and cash flow forecasts prepared for the period ending 12
months after the Repurchase date for this purpose, and after ensuring that the
solvency and liquidity tests specified in Section 4 of the Act are met by the
Company after the Repurchase.
The Board also decided to retain so much of the shares as treasury shares as
will increase the quantity of shares in Pinnacle that the Group will own to 10%
of Pinnacle`s issued share capital after the Repurchase and to cancel the
remainder out of share premium. The treasury shares so acquired will be
retained for strategic purposes.
3. TERMS OF THE REPURCHASE
The purchase consideration for the Repurchase amounts to R129 612 352.50. A
repurchase price offered of R7.50 per ordinary share has been accepted by
Pinnacle, which represents a discount of 18.4% to the 30 business day volume
weighted average price of 919.1 cents per share up to and including 24 October
2011, being the last business day prior to the acceptance of the Offer.
It is intended that the Repurchase will be funded out of a financing structure
to be developed specifically for the Repurchase with the Company`s bankers.
Details of the structure will be provided in the circular that will be
distributed to all shareholders together with the notice of meeting of
shareholders to approve the Repurchase.
Following the conclusion of the Repurchase, application will be made to the JSE
Limited ("the JSE") for the cancellation and delisting of the 11 482 801 shares
repurchased by Pinnacle.
Pinnacle Holdings Limited and the Group-controlled Pinnacle Share Purchase
Scheme Trust will hold a total of 16 987 365 shares in Pinnacle as treasury
shares after the Repurchase. At that point in time this will represent 10% of
the reduced number of issued shares in Pinnacle, after the Repurchase and
cancellation of the 11 482 801 shares repurchased by Pinnacle.
4. CONDITIONS PRECEDENT TO THE SCHEME
The Scheme will be subject to the fulfillment of the following conditions
precedent by not later than 8 January 2012, which date is 75 calendar days from
the date of acceptance of the Offer as specified in the subscription agreement:
4.1 The approval of the Scheme by the requisite majority of Shareholders,
as contemplated in section 115(2) of the Act;
4.2 To the extent required, the approval of the implementation of such
resolution by the court; and if applicable, Pinnacle not treating the
aforesaid resolution as a nullity, as contemplated in section
115(5)(b) of the Act;
4.3 The unconditional written approval of the Scheme as set out in the
circular (or if such approval is conditional, such conditions being
satisfactory to Pinnacle) having been obtained from the Takeover
Regulation Panel ("TRP") (in terms of a compliance certificate to be
issued in terms of the Act) and the JSE; and
4.4 The independent expert appointed by the Pinnacle Board, ("Independent
Expert") as required in terms of section 114(3) of the Companies Act
and the Takeover Regulations, confirming in its report that the
Repurchase is fair and reasonable.
5. PRO-FORMA FINANCIAL EFFECTS
The table below sets out the unaudited pro forma financial effects of the
Repurchase on Pinnacle. These pro-forma financial effects are the responsibility
of the Company`s directors and are presented for illustrative purposes only to
show how the Repurchase may have affected Pinnacle`s financial performance and
position for the year ended 30 June 2011. The accounting policies of Pinnacle
have been used in calculating the pro-forma financial effects.
The pro-forma financial effects which, due to their nature, may not provide a
fair reflection of Pinnacle`s financial performance or position after the
Repurchase, are based on the assumptions that:
- For the purpose of calculating earnings per share and headline earnings per
share the Repurchase was implemented at start of business on 1 July 2010;
and
- For the purpose of calculating net asset value per share and net tangible
asset value per share, the Repurchase was implemented on 30 June 2011.
Before the After the % Change
Repurchase Repurchase
Earnings per share (cents) 121.0 128.3 6.0
Headline earnings per share 117.7 124.6 5.9.
(cents)
Net asset value per share 380.2 330.9 (13.0)
(cents)
Net tangible asset value per 343.6 290.0 (15.6)
share (cents)
Number of shares in issue net 165 528 148 246 (10.4)
of treasury shares (`000)
Weighted average shares in 181 965 164 684 (9.5)
issue (`000)
Notes and assumptions:
a. The "Before" information has been extracted, without adjustment, from
Pinnacle`s published audited results for the year ended 30 June 2011.
b. The Repurchase is expected to be funded to the extent of the full
purchase price of R129 612 352 out of a financing structure to be
developed with the Company`s bankers. A cost of funding has been
assumed to be 7.0% per annum plus a once off transaction cost of 1%
which will be amortised over the proposed loan tenure of 3 years.
c. Dividends payable on the 5 798 846 shares purchased by Pinnacle
Holdings Limited as treasury shares will be retained in the Group and
which means that on a consolidated basis effectively no dividend will
have been paid on these shares.
d. R661 000 has been provided as estimated transaction costs in respect
of the shares that Pinnacle will repurchase, cancel and delist.
Transaction costs estimated at R334 000 in respect of the shares to be
purchased by Pinnacle Holdings Limited and retained as treasury shares
will be capitalised as costs of the acquisition of those shares.
Both are once off by nature and exclude the costs of funding referred
to in paragraph (b) above.
6. CATEGORY
The Repurchase is classified as a specific repurchase of securities in terms of
Section 5.67 of the JSE Listings Requirements from a related party as defined in
Section 10.1(b) of the JSE Listings Requirements, as Amabubesi is a material
shareholder holding 10.4% of the issued share capital of the Company (net of
treasury shares) before the Repurchase. As the price at which the securities
are purchased is not at a premium to the average traded price over the 30 days
prior to accepting the Offer, a fairness opinion is not required in terms of the
JSE Listings Requirements. A fair and reasonable opinion is however required in
terms of the Takeover Regulations and Section 114 (3) of the Act. Accordingly,
the Board will appoint an Independent Expert acceptable to the TRP, to provide
it with a fair and reasonable opinion relating to the Scheme.
The substance of the external advice received from the Independent Expert and
the views of the Board will be detailed in the circular to shareholders.
7. CIRCULAR
A circular, providing further information on the Repurchase, the Scheme and
containing a notice of general meeting and a form of proxy, subject to approval
by the JSE and the TRP, will be posted to shareholders on or about 5 December
2011.
8. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
As details of the Repurchase have been provided in this announcement,
shareholders are advised that they no longer need to exercise caution when
dealing in their Pinnacle securities.
9. RESPONSIBILITY STATEMENT
Pinnacle`s Board accepts responsibility for the information contained in this
announcement. To the best of their knowledge and belief, the information
contained in this announcement is true and nothing has been omitted which is
likely to affect the import of the information.
Midrand
27 October 2011
Sponsor
Deloitte & Touche Sponsor Services (Pty) Limited
Attorneys for the Group
Tugendhaft Wapnick Banchetti and Partners
Reporting Accountants
BDO South Africa Inc.
Date: 27/10/2011 17:17:04 Produced by the JSE SENS Department.
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howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS. |
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