07 Aug 2012
ISSUE OF SHARES BY BOSCHENDAL PROPRIETARY LIMITED, RIGHTS OFFER IN BOSCHENDAL AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
(Incorporated in the Republic of South Africa)
Registration number 1894/00854/06
Share code: JCD
ISIN: ZAE0000039681 (Suspended)
(”JCI” or ”the Company”)
ISSUE OF SHARES BY BOSCHENDAL PROPRIETARY LIMITED (“BOSCHENDAL”) TO CANOMBYS LIMITED(“CANOMBYS”),ADVANCE OF SHAREHOLDER LOAN BY CANOMBYS TO BOSCHENDAL, EQUALISATION OF SHAREHOLDER LOANS IN BOSCHENDAL, RIGHTS OFFER IN BOSCHENDAL AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
JCI is pleased to announce that Boschendal, a 62.67% subsidiary of JCI Investment Finance Proprietary Limited (“JCIIF”) which is in turn a wholly-owned subsidiary of JCI, has entered into a transaction agreement (“Transaction Agreement”) with Canombys whereby:
Boschendal will issue 769,608 ordinary shares to Canombys for an aggregate value of R76.96 (“the Subscription”).
The Subscription will result in JCI’s indirect interest in Boschendal reducing to 49.0%. Canombys is about to acquire IFA Hotels & Resorts Limited’s (“IFA”) 37.33% interest in Boschendal (“IFA Acquisition”) which acquisition was announced by IFA on SENS on 20 July 2012 (and which is conditional, inter alia, on the successful conclusion of the transactions outlined in the Transaction Agreement);
Canombys will advance R79,999,923.04 to Boschendal as a shareholders loan (“the Shareholders Loan”);
JCIIF and Canombys’ shareholder loans to Boschendal will be equalised such that Canombys and JCIIF shall hold 51% and 49% respectively of the shareholder loans owing by Boschendal to its shareholders (“the Equalisation”); and
Boschendal shall effect a rights offer to its shareholders to raise R20,000,000.00 of additional capital (“the Rights Offer”)(collectively the “Transactions”).
The Transaction Agreement stipulates that the Transactions form one indivisible transaction and that Canombys would not conclude any of the underlying transactions without concluding all of the other
The Transactions are subject to the conditions precedent outlined in paragraph 2.7 below.
2. Overview of the Transactions
2.1. Description of Boschendal
Boschendal is one of the oldest wine farms in South Africa with a French viticultural heritage dating back to 1685. Boschendal is set on a 2,240 hectare estate between Stellenbosch and Franschhoek in the Western Cape, and consists of vineyards which cover an area of 254 hectares, extending for six kilometres along the slopes of the Groot Drakenstein Mountain towards the Dwars River and the slopes of the Simonsberg Mountain.
Boschendal is currently the site of a proposed mixed-use development.
2.2. Rationale for the Transactions
Boschendal is currently operating at a loss and is in need of a cash injection to provide the necessary working capital in order to fund its ongoing operations. The Transactions provide Boschendal with cash required to meet its operational cash flow requirements and to invest in infrastructure in order to allow the marketing and sale of Phase 1 of Boschendal’s proposed mixed-use development to progress.
The Transactions also relieve JCI of the burden of financing Boschendal’s ongoing operational expenditure and will allow the Boschendal development to progress to a stage where it is materially self-funding.
2.3. The Subscription
Following the fulfillment of the conditions precedent outlined in paragraph 2.7, Boschendal will issue 769,608 ordinary shares to Canombys in exchange for an aggregate amount of R76.96 which equates to an issue price per share of R0.0001.
2.4. The Shareholder Loan
Following the fulfillment of the conditions precedent outlined in paragraph 2.7, Canombys will advance R79,999,923.04 to Boschendal as a shareholders loan. The Shareholder Loan will accrue interest at Prime less 1 percent.
2.5. The Equalisation
In terms of the Equalisation, JCIIF and Canombys’ shareholder loans to Boschendal will be equalised such that Canombys and JCIIF shall hold 51% and 49% respectively of the shareholder loans owing by Boschendal. In order to effect the Equalisation, JCIIF will sell and cede approximately R43,496,625.87 of its shareholder loans to Canombys for R1.00. This will result in shareholder loans owing by Boschendal to Canombys and JCIIF after the Equalisation of approximately R286,776,454.91 and R276,374,750.13 respectively.
2.6. The Rights Offer
In terms of the Transaction Agreement, Boschendal will effect a rights issue to raise additional capital funding of R20,000,000.00 or such other amount as may be agreed to by JCIIF, Canombys and Boschendal subject to the following:
The Rights Offer will be effected at a subscription price of R0.0001 per share to be offered proportionately to all shareholders of Boschendal;
The new ordinary shares to be allotted in terms of the Rights Offer will rank pari passu with all previously issued shares of Boschendal;
Each shareholder who wishes to follow its rights shall be obliged to give Boschendal written notice of its acceptance by no later than 10 business days following the date that the Boschendal board of directors agrees to implement the Rights Offer or such extended date as may be required by any shareholder of Boschendal should such shareholder by obliged to obtain any regulatory approval to implement acceptance of the Rights Offer;
Canombys and JCIIF have agreed to subscribe for shares to the value of R10,200,000 and R9,800,000 respectively; and
Should JCIIF fail to subscribe for its proportionate number of shares in terms of the Rights Offer, Canombys shall have the right to subscribe for those shares for which JCIIF does not subscribe.
2.7. Conditions precedent
The Transactions are subject to the fulfillment or waiver of the following conditions precedent within 45 business days after the signature date of the Transaction Agreement, being 2 August 2012:
a) The approval of the Financial Surveillance Department of the South African Reserve Bank being obtained to give effect to and implement the IFA Acquisition and the Transactions;
b) All other regulatory approvals, consents and shareholder approvals being obtained to give effect to the Transactions;
c) Canombys completing, to its satisfaction, a due diligence investigation into the affairs of Boschendal and its underlying businesses, assets and liabilities;
d) JCIIF and Canombys entering into a shareholders’ agreement and adopting a new MOI and the shareholders’ agreement becoming unconditional (save for any condition therein requiring that the Transaction Agreement become unconditional);
e) The IFA Acquisition becoming unconditional in all respects;
f) Boschendal’s bankers consenting in writing to the implementation of the IFA Acquisition and the Transactions, to the extent legally required;
g) Boschendal’s bankers providing written confirmation, to the satisfaction of Canombys, that:
they shall not call for repayment of the loan owing by Boschendal to them for a period of at least 90 days from the date of signature of the Transaction Agreement, being 2 August 2012; and they, or such other third party financier as may be acceptable to Canombys, will advance a loan or facility to Boschendal for at least R125 000 000, or such lesser amount as Canombys may in its discretion determine, for a period of not less than 3 years from the expiry of the 90 day period referred to above, and on such terms and conditions as may be acceptable to Canombys.
Each of the conditions precedent set out in paragraphs 2.7 (c) and (e) to (g) (inclusive) hav