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CULLINAN HOLDINGS LIMITED - Proposed Specific Repurchase by Cullinan of 100% of the issued 5.5% Cumulative Preference Shares in the Company

09 November 2018 - 16:10 PM
CULP
Proposed Specific Repurchase by Cullinan of 100% of the issued 5.5% Cumulative Preference Shares in the Company

CULLINAN HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1902/001808/06)
Preference share code: CULP
ISIN: ZAE 000001947
("Cullinan" or "the company")

ANNOUNCEMENT OF PROPOSED SPECIFIC REPURCHASE BY CULLINAN
("the Offeror") OF 100% OF THE ISSUED 5,5% CUMULATIVE PREFERENCE
SHARES IN THE COMPANY ("the Preference Shares")

1.  INTRODUCTION
 
    Holders of the Preference Shares ("the Preference Shareholders") are advised that on 16 October 2018 the board of
    directors of the company ("the board") resolved to repurchase 100% of the Preference Shares ("the proposed transaction").
 
    It is intended that the proposed transaction will be implemented by way of a scheme of arrangement in terms of
    sections 114 and 115 of the Companies Act, 2008 ("the Act" and "the Scheme").
 
    The proposed transaction is classified as an affected transaction in terms of section 117(c)(iii), as read with section 114(1)(e),
    of the Act. The board has therefore appointed a sub-committee of the board, comprising of Ms Anita Mendiratta and
    Messrs Mervyn Burton and Rudewaan Arendse, who are independent non-executive directors ("the independent
    committee"), to oversee the process, which will involve the appointment of an independent expert acceptable to the
    Takeover Regulation Panel ("the TRP" and "the expert"). The expert will provide the independent committee with advice in
    regard to the proposed transaction and the Scheme, make appropriate recommendations to the independent committee
    on behalf of the Preference Shareholders and prepare a report to the board for distribution to all holders of the company's
    securities in terms of section 114(3) of the Act.
 
    The recommendations of the board, the independent committee and the report of the expert will be included in a
    circular to the Preference Shareholders containing the terms and conditions governing the proposed transaction and the
    Scheme ("the Scheme Circular") which will be distributed to the Preference Shareholders subject to the fulfilment of the
    conditions set out in paragraph 5 below.
 
2.  CONSIDERATION
 
    The consideration in terms of the proposed transaction is R2,20 per Preference Share ("the Consideration"), payable
    in cash.
 
    The Consideration is equal to the par value of a Preference Share of R2,00, plus a premium of 10%. In addition, the
    Preference Shareholders will be entitled to receive the dividend to be declared in January 2019 in respect of the six
    months ended 31 December 2018.
 
    The Consideration is at a premium of 120% to the last trade of Preference Shares, which occurred on 23 April 2018,
    when 2 600 Preference Shares were traded at 100 cents per share.
 
    The aggregate Consideration payable on successful implementation of the Scheme will be R1 100 000.

3.  RATIONALE FOR THE SCHEME

    The listing of the ordinary shares in Cullinan on the Johannesburg Stock Exchange ("the JSE") was terminated on
    20 March 2018 after the approval of a scheme of arrangement in terms of which the holding company of the Offeror,
    Alpine Asset Management Limited, acquired 100% of the issued ordinary share capital of the company.

    An offer was not extended to the Preference Shareholders at that time, as the Preference Shareholders were not entitled
    to vote at the scheme meeting held in respect of the ordinary shares, and they remained listed. For the reasons set out in
    paragraph 1 above, and as approval of the Scheme by the requisite majority will result in the expropriation of Preference
    Shares held by the minority, the board is therefore of the view that the provisions of the Act governing transactions of
    this nature be adhered to.

    The board considers that maintaining the listing of the Preference Shares is of little value and involves unnecessary
    expense and it has therefore resolved to implement the proposed transaction.

    In the circumstances, the proposed transaction is in the view of the board worthy of consideration by the Preference
    Shareholders as envisaged above.

4.  CONDITIONS PRECEDENT TO THE POSTING OF THE SCHEME CIRCULAR

    The posting of the Scheme Circular is subject to the fulfilment of the following conditions precedent:
    4.1  the expert will have prepared and submitted the report in terms of sectin 114(3) of the Act;
    4.2  the requisite approvals being received from the TRP and the JSE;
    4.3  the expert will have prepared and submitted a fair and reasonable opinion to the independent committee;
    4.4  the independent committee and the board will have resolved to recommend acceptance of the proposed transaction
         to the Preference Shareholders; and
    4.5  the board will have passed a resolution in terms of section 46(1) of the Act, confirming that the company will satisfy
         the solvency and liquidity test as set out in sectin 4 of the Act immediately after completing the proposed transaction.

5.  CONDITIONS PRECEDENT TO THE SCHEME

    The Scheme will be subject to the fulfilment of the following conditions precedent by 31 March 2019, or such later date
    as the company and the TRP may agree to in writing:
    5.1  approval of the Scheme by the requisite majority of the Preference Shareholders, as contemplated in section 115(2)
         of the Act, and:
         -  to the extent required, the approval and the implementation of such resolution by the court as contemplated in
            section 115(3)(a) of the Act; and
         -  if applicable, the company not treating the aforementioned resolution as a nullity, as contemplated in
            section 115(5)(b) of the Act; and
    5.2  Preference Shareholders not having exercised appraisal rights by giving valid demands to this effect to the company,
         in terms of section 164(7) of the Companies Act, in respect of more than 15% of the Preference Shares within
         30 business days following the Scheme Meeting, provided that, in the event that any Preference Shareholders give
         notice objecting to the Scheme, as contemplated in section 164(3) of the Act, and those Preference Shareholders
         vote against the resolution proposed at the Scheme Meeting to approve the Scheme, but do so in respect of no
         more than 15% of the Preference Shares, this condition shall be deemed to have been fulfilled at the time of the
         Scheme Meeting; and
    5.3  the TRP having issued a compliance certificate as required in terms of section 121(b) of the Act.

6.  SHAREHOLDINGS, ACTING AS PRINCIPAL AND CONCERT PARTIES

    The company confirms that it presently owns no Preference Shares, that it is the ultimate proposed purchaser of all the
    Preference Shares and is not acting in concert with, or as an agent or broker for, any other party.

7.  FUNDING THE CONSIDERATION

    The maximum aggregate Consideration will be R1 100 000. The company has sufficient cash resources available for the
    payment of the Consideration in terms of the Scheme, and, in compliance with Regulations 111(4) and 111(5) of the Act,
    Fluxmans Inc. Attorneys has provided to the TRP the necessary irrevocable unconditional confirmation that such cash
    is held in escrow by them.

8.  IRREVOCABLE UNDERTAKINGS AND APPROVAL BY SOLE ORDINARY SHAREHOLDER

    The company has been provided with irrevocable undertakings to vote in favour of the resolutions required to implement
    the Scheme by the following Preference Shareholders, who hold 82,03% of the Preference Shares:

    Name of Preference Shareholder     Number of Preference Shares held     Percentage of Preference Shares held
    Old Sillery                                                 150 128                                    30,03
    PRS Shotter                                                 150 000                                    30,00
    HAM Shotter                                                  60 000                                    12,00
    Janus Asset Management                                       25 000                                     5,00
    RC Rinaldi                                                   25 000                                     5,00

    The sole shareholder of the ordinary shares in the company has approved the proposed transaction.

9.  TERMINATION OF THE LISTING OF THE PREFERENCE SHARES

    Should the Scheme be implemented as contemplated in this announcement, the Offeror will become the holder of
    100% of the Preference Shares which will then become unissued Preference Shares and their listing on the JSE will
    be terminated.

10. SCHEME CIRCULAR

    The Scheme Circular relating to the proposed transaction, incorporating the terms of the Scheme, the notice of the
    Scheme Meeting, a form of proxy and a form of surrender will be posted to The Preference Shareholders within
    20 business days of this announcement. The salient dates and times in relation to the Scheme will be published on the
    date of posting the Scheme Circular and will also be contained in the Scheme Circular. 

11. RESPONSIBILITY STATEMENT

    The board and the independent committee accept responsibility for the information contained in this announcement,
    and certify that, to the best of their respective knowledge and belief, the information is true and, where appropriate, this
    announcement does not omit anything likely to affect the importance of the information included.

By order of the board
Bradley Allison
Company secretary

Johannesburg
9 October 2018

Sponsor
ARBOR CAPITAL

Auditors
MAZARS

Attorneys
Fluxmans Attorneys



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