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JSE
KWI
KWK - Kwikot Limited - Abridged Prospectus
Kwikot Limited
(Formerly Kwikot (Proprietary) Limited)
(Incorporated in the Republic of South Africa)
Registration number 1997/003045/06
Share code: KWK
ISIN number: ZAE000119434
("Kwikot" or "the Company")
ABRIDGED PROSPECTUS
Abridged prospectus relating to:
- a private placing by way of an offer for sale of a maximum of
66,231,220 ordinary shares of R0.00001 each ("Ordinary Shares") in the
share capital of Kwikot priced between R8.10 and R9.60 per share
("Private Placing"); and
- the subsequent listing of Kwikot on the Main Board of the JSE Limited
("JSE").
This Prospectus is not an invitation to the general public to subscribe for
Ordinary Shares, but is issued in compliance with the Listings Requirements
of the JSE, for the purpose of providing information to the public with
regard to the Company. The Private Placing is made to invited institutional
investors, selected private clients and invited retail investors only
("Qualifying Investors").
The purpose of this abridged prospectus is to provide Qualifying Investors
and members of the investment community with information relating to
Kwikot, its operations, its directors and management and financial
information.
1. Introduction and rationale
The JSE has approved the listing of the entire issued share capital of
Kwikot being 173,532,000 Ordinary Shares, with effect from the commencement
of business on 28 May 2008, in the `Construction & Materials - Building
Materials & Fixtures` sector of the JSE under the abbreviated name
`Kwikot`.
The Private Placing will result in up to 66,231,220 Shares being placed
with Qualifying Investors, which is expected to be 38% of the issued share
capital of the Company. The Placing Shares will rank pari passu with the
existing issued Kwikot Ordinary Shares.
The proceeds from the Private Placing will be applied to the offer for sale
which will allow Corvest 2 (Proprietary) Limited and certain existing
management shareholders to partially realise their investment in the
Company and will facilitate liquidity in the trading of Kwikot Shares.
The subsequent Listing will also:
- enhance investors` awareness of Kwikot;
- facilitate direct investment in Kwikot;
- provide access to equity capital;
- help attract and retain employees; and
- provide investors with a market for trading Kwikot Shares.
The Private Placing is subject to:
- placing a minimum of 34,706,400 Shares with Qualifying Investors;
- achieving a spread of shareholders acceptable to the JSE; and
- achieving a price within, or greater than, the price range.
The opening date of the private placing is 09:00 Tuesday 13 May 2008 and the
closing date is 12:00 Thursday 22 May 2008.
2. Overview of Kwikot
Kwikot is a leading industrial manufacturer and distributor of Kwikot
branded products to South Africa`s residential housing, commercial building
and industrial infrastructure sectors. Kwikot`s products include hot water
systems, solar heating systems, cold water chiller tanks, valves, drip
trays, insulation, water purification systems and a wide range of stainless
steel kitchenware and sanitaryware.
Kwikot is the leading manufacturer and supplier of a complete range of
domestic hot water systems to the local market. The Company also supplies
hot water systems to other African and international markets.
Kwikot has been involved in the development and production of solar geyser
tanks for many years. These are exported primarily to Indonesia and
Australia. Given recent developments with Eskom and the electrical power
shortages in South Africa, Kwikot finds itself ideally placed to capitalise
on the demand for energy efficient water heating solutions in South Africa.
This area is expected to represent significant growth for the Company in
the years to come.
The Kwikot Industrial Division manufactures bulk hot water and cold water
chiller tanks to customer specification. These systems range from 500
litres to 30 000 litres and require the manufacturing skills and expertise
developed by Kwikot over its substantial operating history.
The Company has also expanded its product offering to include the market
for valves, spare parts, service and maintenance and other auxiliary
products such as drip trays and geyser insulation.
In late 2005, the Kwikot Board made a decision to enter into the marketing
and distribution of a range of locally manufactured and imported stainless
steel kitchenware and sanitaryware products, under the Kwikot brand name
(principally fabricated sinks, bowls, wash troughs, preparation tables and
urinals). This range was launched in February 2006 and is proving to be
highly successful.
In 2007 the Company entered into the domestic water purification market as
the demand and need for pure and clean water free of chemicals, odour and
bad taste increases.
Based on the success of the introduction of new product ranges, the Company
anticipates further rollout of new ranges of construction fittings and
fixtures.
3. Prospects of the Company
In the opinion of the Directors of Kwikot, the growth prospects of the
Company are very good. Organic growth into complementary products with well
established brands has provided a platform for continued diversification
and future growth.
The market for geysers continues to expand in line with the growth in
housing and as more South Africans insist on hot water as a primary need.
Industrial tank sales will continue to grow in line with infrastructural
development and buoyed by, in general, accommodation requirements in both
industry and tourism.
There is expected to be continued growth in valves and accessory sales in
line with geyser sales and sustained by the replacement market for these
products.
Stainless steel sinks and related product sales continue to grow toward a
targeted market share level. Additional products that will enhance this
product portfolio have been identified.
Investment in excess of R35 million has been made in state-of-the-art plant
and equipment, which will ensure continued manufacturing economies of
scale, production efficiencies and enhanced product quality.
In August 2008 Kwikot intends to commission new welding plant and machinery
at a cost of R10 million. It is anticipated that this investment will
increase production capacity and further improve efficiency through the
introduction of new developments in welding technology.
Kwikot is well positioned to meet the requirements of the rapidly
developing market for geysers whose water heating requirements are
supplemented by solar energy. Substantial growth is expected from this
market.
Kwikot has been quick to respond to the demand for solar water heater
solutions and is able to provide solar solutions in the form of:
- complete new solar geyser systems; and
- the supply of conversion kits, which enable the conversion of existing
geyser systems to solar systems.
Kwikot has the production capacity available to take advantage of the solar
geyser opportunity with minimal further investment and expects this to
become a significant contributor to the Company`s net profit.
4. Directors
The names, ages, business addresses, qualifications, occupations,
nationalities and brief curricula vitae of the Directors and senior
management are set out below:
4.1 Non-executive Directors
Director Business Abbreviated curriculum vitae
address
Ashley 5th Floor East, Ashley Mabogoane is the chief
Mabogoane 10 South executive officer of New
(49) South Boulevard, Seasons Investments. He is the
African Bruma, Liberty former CEO of FABCOS
Chairman Gardens Investments Holdings and was
(Independent) non-executive responsible for
driving the commercialisation
of the FABCOS Group and its
transformation from being a
donor driven organisation to a
fully fledged commercially
driven investment holding
company. He serves as non-
executive chairman of African
Bank and also chairman of
Fidelity Springbok Security
Services.
Dick Merks 2nd Floor, Dick Merks holds the following
(50) South Northern Block, qualifications: BCom
African The Reserve, 54 Accounting, BCom Accounting
Melville Road, (Hons), MBA, Chartered
Illovo Accountant (SA). Dick started
his working career at Meyer
Wilson & Marsh, where he
completed a three-year period
of Articles to qualify as a
Chartered Accountant.
Thereafter, he spent eighteen
months with Chubb Holdings as
Internal Auditor. Following
this Dick spent two years with
the Industrial Development
Corporation, where he was Team
Leader responsible for
Financial Feasibility Studies,
which resulted in the IDC
providing financial assistance
to a large number of companies.
He joined Barclays Merchant
Bank in 1986, where he was
involved in management buy-
outs, buy-ins, and providing
development capital to various
companies. Dick was one of the
founding partners of RMB
Corvest in 1989, which
specialises in providing
funding to companies to finance
management buy-outs, management
buy-ins, leverage buy-outs and
development capital. He is
currently one of the main Board
Directors responsible for a
significant portfolio of
investments and sits on
numerous boards.
Jan Hugo (50) Allure Capital, Jan Hugo is a chartered
South African Suite 8, Ground accountant with more than 20
(Independent) Floor, years experience in the banking
Twickenham industry in South Africa. Jan
Building, served his articles with Peat
Dimension Data Marwick & Mitchell in
Campus, Cnr Johannesburg and Jacksonville
Sloane Street in the USA. He started his
and Main Road, banking career at Rand Merchant
Bryanston Bank in the Corporate Finance
(M&A) business which he headed
up from 1995 to 2000. During
this time he served on the
board of Rand Merchant Bank as
an executive director and as a
nonexecutive director on the
board of RMB Australia. In 2000
he became the CEO of RMB Asset
Management, a position he held
until 2002 when he resigned to
become co-owner of a helicopter
charter business. Jan joined
Standard Bank Corporate and
Investment Banking Division in
2004 where he was appointed as
head of the Private Equity
division. He served on the
Bank`s Executive Committee. He
also served on the boards of
two private equity investment
companies, Defy Appliances and
Expandasign. He resigned from
Standard Bank at the end of
2007 to form Allure Capital.
During his employment in the
banking industry he served as
an adviser to a number of large
blue chip companies in
particular Richemont, Remgro,
Medi-Clinic, Dimension Data and
Comparex to name a few. He was
also involved in a number of
successful private equity
transactions. Jan has recently
become involved in coaching ,
mentoring and consulting to
management teams of major South
African and foreign companies.
He has completed the University
of Cape Town "Coaching to
Excellence" course. Jan has a
BCom (Hons) from the University
of Pretoria and is a Chartered
Accountant (SA).
The appointments of Ashley Mabogoane and Jan Hugo are conditional on the
listing of Kwikot.
4.2 Executive Directors
The executive directors have the responsibility for the day-to-day running
of the business and the execution of Kwikot`s strategy. There is a clear
division of responsibilities between the executive committee and the Board.
Director Business Abbreviated curriculum vitae
address
Pieter J No 3 Aberdeen Piet Malan holds the degrees of
Malan (56) Road, BSc Eng (Mech)(Pret) and MBL
South African Industrial (Unisa). He joined Kwikot as
Managing Sites, Benoni chief executive in 1994, when
Director 1501 the Company was owned by Boumat.
During this period Piet also
served on the Boumat Board.
Prior to this he was a managing
director of Copper Alloys
Corporation (a subsidiary of
Haggie) for eight years and
before that a general manager of
Jurgens Caravans for four years.
He participated in the
management buy-out in 1999 and
continues to hold Shares in the
Company.
Sean Wanckel No 3 Aberdeen Sean Wanckel holds the degrees
(53) South Road, of BCom and MBA and has
African Industrial completed courses in treasury
Financial Sites, Benoni management and production and
director 1501 inventory management. After
working in banking for a period,
he joined a manufacturing group
where over a ten-year period, he
gained extensive experience in
various financial, personnel and
labour functions. He then joined
the engineering division of the
Boumat Group in 1990 as
Financial Director and joined
Kwikot in 1995, in the same
capacity. He participated in the
management buy-out in 1999 and
besides finance, oversees the
personnel and information
technology aspects of the
business, and continues to hold
Shares in the Company.
5. Share Capital
The authorised and issued share capital of Kwikot, before and after the
Private Placing, is set out below:
Rand
Authorised share capital of Kwikot before and after the
Private Placing
400,000,000 Ordinary Shares of R0.00001 each 4,000
Issued share capital of Kwikot before and after the
Private Placing
173,532,000 ordinary shares of R0.00001 each 1,735
Share Premium -
Total issued share capital 1,735
All the issued Shares of Kwikot are of one class, namely Ordinary Shares
with a nominal value of R0.00001 each, ranking pari passu in all respects.
Subject to, placing a minimum of 34,706,400 Ordinary Shares Qualifying
Investors, the shareholders spread requirements of the JSE Listings
Requirements being met and achieving a price within, or greater than, the
price range, the entire issued share capital of Kwikot will be listed on
the Main Board of the JSE Limited. The Shares will be issued in
dematerialised form.
6. Copies of this prospectus
Copies of this prospectus (in English only) can be obtained by Qualifying
Investors during normal business hours from Tuesday 13 May 2008 to
Wednesday 28 May 2008, both days inclusive, from the Company`s registered
office or from the office of Rand Merchant Bank.
The registered office of Kwikot and Rand Merchant Bank:
No 3 Aberdeen Road 1 Merchant Place
Industrial Sites Cnr Fredman Drive & Rivonia Road
Benoni Sandton
1501 2196
South Africa
Sandton
13 May 2008
Merchant bank and financial adviser
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Bookrunner
RMB MORGAN STANLEY (PTY) LTD
Sponsor
PRICEWATERHOUSECOOPERS CORPORATE FINANCE (PTY) LTD
Reporting accountants and auditors
KPMG INC
Attorneys
READ HOPE PHILLIPS THOMAS AND CADMAN INC.
Date: 13/05/2008 11:56:01 Produced by the JSE SENS Department.
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