LHG
LHG - Litha - Posting of Circular to Litha Shareholders regarding Strategic
Partnership Transaction and Paladin Offer to Minorities
LITHA HEALTHCARE GROUP LIMITED
Incorporated in the Republic of South Africa
(Registration number 2006/006371/06)
Share code: LHG
ISIN: ZAE000144671
("Litha" or "the Company" or "the Group")
PALADIN Labs Inc.
Incorporated in Canada
TSX SYMBOL: PLB
("Paladin")
POSTING OF CIRCULAR TO LITHA SHAREHOLDERS REGARDING STRATEGIC PARTNERSHIP
TRANSACTION AND PALADIN OFFER TO MINORITIES
1. Introduction
Shareholders are referred to the detailed terms announcement setting out the
terms of a proposed strategic partnership transaction and to the definitions
contained therein, which was released on SENS on 21 February 2012 and in the
press on 22 February 2012 and 23 February 2012 ("the detailed terms
announcement").
In the detailed terms announcement it was stated, inter alia, that:
- "Litha and other parties have entered into a number of indivisible
transaction agreements, including (i) a sale of shares and subscription
agreement with Paladin in terms of which Litha will purchase certain
Pharmaplan shares from Paladin for cash and Paladin will subscribe for new
Litha shares, the subscription price for which shall be discharged by the
transfer of the balance of the Pharmaplan shares held by Paladin to Litha;
and (ii) a service agreement with Gerardus Adrianus Hoogland ("Gert"), the
current chief executive officer of Pharmaplan, providing for, inter alia,
Gert's employment by Litha, confidentiality and restraint undertakings
which are customary for agreements of this nature and wherein Gert will be
granted the right to acquire Litha shares in accordance with the terms and
conditions of the Litha Medical Share Incentive Scheme, which together
with the other transactions described in paragraph 2.1 of the detailed
terms announcement, is referred to as "the Transaction";
- Paladin will purchase 72 989 078 Litha shares ("Blackstar Shares") from
Blackstar Group SE and Blackstar (Cyprus) Investors Limited (collectively
referred to as "the Blackstar Entities"), which represents half of the
Blackstar Entities' interest in Litha as at 21 February 2012 for ZAR
200.72 million (being ZAR 2.75 per Litha share) ("the Blackstar Sale
Agreement") and which Blackstar Shares represent approximately 19.48% of
the issued share capital of Litha; and
- subject to the conditions precedent set out in paragraph 2.1.10 and
paragraph 3 of the detailed terms announcement, Paladin will make an offer
to the shareholders of Litha, registered as such on 21 February 2012,
(other than the Blackstar Entities) ("Minority shareholders" or
"Minorities") to acquire half of the shares they held in Litha on 21
February 2012 for cash at a price equal to ZAR2.75 (two Rand seventy five
cents) per Litha share and thereby grant the Minority shareholders the
ability to sell their Litha shares should they wish to do so at the same
price and on substantially the same terms and conditions as those
contained in the Blackstar Sale Agreement (the "Paladin Offer")."
2. Update to the detailed terms announcement and further details on the
Paladin Offer
2.1 Update to the detailed terms announcement:
- The circular to Litha shareholders containing details of the Transaction
and the Paladin Offer and incorporating a notice of general meeting, form
of proxy and form of acceptance, surrender and transfer has been posted to
Litha shareholders today, Monday, 7 May 2012 ("Circular").
- The general meeting of Litha shareholders convened in terms of the notice
of general meeting attached to and forming party of the Circular to vote
on, inter alia, the resolutions required to approve the Transaction, will
be held in the Boardroom of Litha, No 106, 16th Road, Midrand, Gauteng,
1686 at 10:00 on Tuesday, 5 June 2012 ("General Meeting").
- The right described in 2.1.9 in the detailed terms announcement in terms
of which it was stated that Paladin would have the right to participate in
any securities issue and subscribe for such number of Litha shares as are
required to enable it to maintain its voting entitlement in Litha at not
less than 50.1% has been removed.
- The date of 21 February 2012 referred to in paragraph 2.1.10 of the
detailed terms announcement has subsequently been amended as outlined in
the salient dates and times table referred to in paragraph 3 below.
- The circular has been updated with an estimated purchase price allocation
effect in terms of IFRS, shareholders are accordingly referred to the
Circular to review the revised financial effects.
- In addition, the Circular now incorporates details on a proposed funding
arrangement between Litha and FirstRand Bank Limited, acting through RMB,
in terms of which it is proposed that Litha will, subject to shareholder
approval at the General Meeting, create 125 000 unlisted redeemable no par
value preference shares in Litha having the preferences, rights,
limitations and other terms as set out in Annexure 16 of the Circular, at
an issue price of R1 000 each, the proceeds of which will be used for
purposes of funding the acquisition by Litha of certain shares in
Pharmaplan.
2.2 The Paladin Offer
2.2.1 Introduction
The purchase of the Blackstar Shares as contemplated in the Blackstar Sale
Agreement, in itself, does not result in Paladin acquiring more than the
prescribed percentage of 35% of the issued share capital of Litha and thus does
not trigger the need for Paladin to make a mandatory offer to the Minority
shareholders of Litha as contemplated by the Takeover Regulations contained in
Chapter 5 of the Regulations of the Companies Act. It is, however, an "affected
transaction" as specified in section 117(1)(c)(iv) of the Companies Act and
therefore regulated by the TRP.
As such, the TRP expressed the view that, to ensure that all holders of Litha
shares are afforded equal treatment, Paladin should grant the Minority
shareholders the ability to sell 50% of their Litha shares, should they wish to
do so, at the same price and on substantially the same terms and conditions as
those contained in the Blackstar Sale Agreement.
The Circular accordingly incorporates an offer by Paladin to acquire from those
Minority shareholders that validly and lawfully accept the Paladin Offer by
Friday, 20 July 2012 (being the "Paladin Offer Closing Date"), subject to any
change in date as contemplated below, ("the Paladin Offer Participants"), 50%
of the Litha shares held by Paladin Offer Participants as at Friday, 6 July
2012, for a price equal to ZAR 2.75 per Litha share payable in cash ("the
Paladin Offer Consideration").
The Paladin Offer is subject to fulfilment (or, if applicable waiver by
Paladin) of the Conditions Precedent referred to in 2.2.2 below.
Minority shareholders holding 180 294 466 Litha shares, representing 53.46% of
the issued shares in Litha have irrevocably undertaken not to accept the
Paladin Offer.
The Minority shareholders who do not make an election will remain shareholders
in Litha.
Minority shareholders' participation in the Paladin Offer will be rounded up or
down, as appropriate with fractions of 0.5 and above being rounded up, and only
whole numbers of Litha shares may be tendered into the Paladin Offer.
Paladin Offer Participants may only accept the Paladin Offer in respect of all
(and not a part only) of their Litha shares forming the subject of the Paladin
Offer (which amounts to 50% of the Paladin Offer Participants' holding in Litha
as at the Paladin Offer record date, being Friday, 6 July 2012), and such
acceptance may only be tendered once. Any acceptances tendered more than once
will be invalid.
Minority shareholders are advised to take note of Litha's share price being
ZAR3.66 at the close of business on Friday, 4 May 2012 compared to the Paladin
Offer price of ZAR2.75 per Litha share, as well as the Independent Board's
recommendation in paragraph 2.4.9 of Section A of the Circular.
2.2.2 The Paladin Offer Conditions Precedent
The Paladin Offer is subject to fulfilment (or, if applicable, waiver by
Paladin) of the conditions precedent referred to paragraph 3 of the detailed
terms announcement and 2.3 of the Circular and the following additional
conditions precedent -
(a) the implementation of the transaction agreements (as defined in the
detailed terms announcement) in accordance with the provisions of the
framework agreement, details of which are contained in the Circular;
(b) to the extent necessary, on or before 5 July 2012, Paladin shall have
obtained any and all approvals, statutory, regulatory or otherwise,
required in South Africa, Canada and/or any other applicable jurisdiction,
for the implementation of the Paladin Offer, including all necessary
approvals required in terms of the Competition Act, and the Toronto Stock
Exchange and/or otherwise;
(c) no distribution (as defined in the Companies Act) shall have been made by
Litha between 21 February 2012, being the signature date of the
transaction agreements, and the later of the date on which the last of the
outstanding conditions stipulated in (a) or( b) above is fulfilled and as
at such date no such intended increase prior to or on the Paladin Offer
Closing Date shall have been announced; and
(d) there shall have been no increase in the number of Litha shares between
the close of business on 21 February 2012, being the signature date of the
transaction agreements, and the later of the date on which the last of the
outstanding conditions stipulated in (a) or (b) above is fulfilled and as
at such date no such intended increase prior to or on the Paladin Offer
Closing Date has been announced, save as required to implement the
transaction agreement or as occurs with the prior written consent of
Paladin.
3. The salient date and times relating to the Transaction and the Paladin
Offer
Set out below are the salient dates and times which will regulate the
Transaction and the Paladin Offer. In terms of the Regulations, the Paladin
Offer must remain open for at least 10 business days after the date on which it
is announced that the Paladin Offer is unconditional. Accordingly, Paladin
reserves the right to change the Paladin Offer Closing Date to an earlier or
later business day which date shall be a Friday, shall not be earlier than 10
business days after the date of the announcement and shall not be earlier than
30 business days from the date that Paladin Offer opens and which shall be
announced by Paladin in the announcement confirming that the Paladin Offer is
unconditional.
The salient dates and times will be as follows:
2012
Record date for the distribution of the Thursday, 26 April
Circular on
Distribute the Circular to Litha shareholders Monday, 7 May
on
Conditional Paladin Offer Opens at 09:00 on Tuesday, 8 May
Last day to trade to determine which Litha Friday, 18 May
shareholders may participate in and vote at the
General Meeting on
Anticipated fulfilment of Conditions Precedent Monday, 21 May
in respect of the Competition Authorities'
process, before or on
Record date for determining which Litha Friday, 25 May
shareholders may participate in and vote at the
General Meeting on
Forms of proxy for the General Meeting to be Friday, 1 June
received by 10:00 (see note 5 below) on
General Meeting of Litha shareholders to be Tuesday, 5 June
held at 10:00 on
Results of the General Meeting released on SENS Tuesday, 5 June
on
Results of the General Meeting published in the Wednesday, 6 June
press on
Last day to trade to participate in the Paladin Friday, 29 June
Offer on
Shares trade "ex" the Paladin Offer on Monday, 2 July
Expected implementation date of the Transaction Monday, 2 July
Listing of the Subscription Shares from the Tuesday, 3 July
commencement of business on
Finalisation announcement confirming that the Friday, 6 July
Paladin Offer is now unconditional, anticipated
to be released on SENS on or before
Final record date to determine the Paladin Friday, 6 July
Offer Participants
The Paladin Offer closes provisionally at 12:00 Friday, 20 July
on
Forms of acceptance and surrender not yet Friday, 20 July
received, to be received by the transfer
secretaries by no later than 12:00 on
Results of the Paladin Offer to be released on Monday, 23 July
SENS on
Paladin Offer Consideration credited to the Monday, 23 July
Paladin Offer Participant's accounts at his
CSDP or broker (as the case may be), in cases
where the shares surrendered are held by such
CSDP or broker as nominee for the Paladin Offer
Participant, by no later than on (see note 4
below)
Cheques posted to or credited to the bank Monday, 23 July
accounts of the Paladin Offer Participant (who
hold their shares in their own names) at the
Paladin Offer Participant's own risk, in
settlement of the Paladin Offer Consideration,
by no later than on (see note 4 below)
Notes:
1 The above dates and times are subject to change. Any material changes will
be released on SENS and published in the South African press.
2. All times quoted in this announcement are South African times.
3. In terms of the Regulations, the Paladin Offer must remain open for at
least 10 business days after the date that it is announced that the
Paladin Offer is unconditional. Accordingly, Paladin reserves the right to
change the Paladin Offer Closing Date to an earlier or later business day
which shall be announced by Paladin in the announcement that the Paladin
Offer is unconditional and which date shall be a Friday, shall not be
earlier than 10 business days after the date of the announcement; and
shall not be earlier than 30 business days from the Paladin Offer Opening
Date.
4. Settlement dates of the Paladin Offer Consideration, being within six
business days after the later of (i) the Paladin Offer being declared
wholly unconditional, and (ii) acceptance thereof by the relevant Paladin
Offer Participant, with the final settlement date being the business day
after the Paladin Offer Closing Date.
5. Any form of proxy not handed by this time must be handed to the chairman
of the General Meeting immediately before the appointed proxy exercises
any of the shareholder rights at the General Meeting.
6. If the General Meeting is adjourned or postponed, forms of proxy submitted
for the initial General Meeting will remain valid in respect of any
adjournment or postponement of the General Meeting.
Midrand
7 May 2012
Merchant bank, funder and sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
Transaction originator and debt underwriter
Blackstar
Independent expert
BDO Corporate Finance Proprietary Limited
Reporting accountants
Mazars
Legal advisors to Litha and Blackstar
Edward Nathan Sonnenbergs Inc
Independent sponsor
Deloitte & Touche Sponsor Services Proprietary Limited
South African legal advisors to Paladin
Werksmans Inc
Canadian legal advisors to Paladin
Davies Ward Phillips & Vineberg LLP
Date: 07/05/2012 17:10:13 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.