BRIMSTONE INVESTMENT CORPORATION LIMITED
Shareholders of Brimstone are referred to the Sea Harvest Intention to Float announcement released on the Stock Exchange News Service (ôSENSö) of the JSE Ltd. (ôJSEö) today, 8 February 2016, and are advised as follows:
Brimstone has been invested in Sea Harvest since 1998, when it acquired an initial shareholding. In 1999 it increased its shareholding to 10.76%. In 2004, Brimstone increased its interest to 21.52% and, when Tiger Brands Ltd. announced its intention to exit Sea Harvest in 2009, Brimstone led a consortium in the largest broad-based black economic empowerment (ôBBBEEö) transaction in the fishing industry and acquired control of Sea Harvest, creating one of South AfricaÆs first black industrial companies. Today, Brimstone holds 85% of Sea Harvest, with management and staff holding the remaining 15%.
Since taking control in 2009, Brimstone has invested a further c.R776 million in Sea Harvest through a combination of additional capital and reinvested profits. This growth has taken the form of organic growth whereby Sea Harvest invested considerably in upgrading its operations, and acquisitive growth whereby Sea Harvest acquired control of Mareterram Ltd. (ôMareterramö), a public company registered and incorporated in Australia and listed on the Australian Stock Exchange and in which Sea Harvest holds a 55.9% controlling interest.
Brimstone has tasked management at Sea Harvest to continue on this growth strategy and in order to do this, Sea Harvest requires capital. In order to facilitate this, Brimstone, together with the other shareholders in Sea Harvest, has resolved to proceed with a separate listing of Sea Harvest on the main board of the JSE by the end of March 2017. A capital raising of up to R1.5 billion (ôPrivate Placementö) will be undertaken by Sea Harvest simultaneously with the Proposed Listing.
Sea Harvest is one of the first black industrial companies to be listed on the JSE, a strong confirmation that transformation works in South Africa.
Importantly, Brimstone remains committed and supportive of Sea Harvest and does not intend disposing of any of the ordinary shares of Sea Harvest held by it (ôSea Harvest Ordinary Sharesö) in the Proposed Listing. Brimstone intends retaining control of Sea Harvest post the Proposed Listing.
As a result of the Proposed Listing, and the simultaneous Private Placement of up to R1.5 billion, BrimstoneÆs 85% interest in Sea Harvest will be diluted to approximately 52%.
Description of Sea Harvest
Sea Harvest is a leading, internationally recognised vertically integrated fishing and food business with operations in South Africa and Australia, servicing retail and foodservice customers in 22 countries. Established in 1964 on the Atlantic West Coast of South Africa, Sea Harvest has become a household brand and market leader in the fish category. In the 2016 Icon Brands Survey, Sea Harvest was rated as the 7th most iconic brand in South Africa and the highest scoring seafood brand.
Sea HarvestÆs principal South African business is fishing for Cape hake, processing of the catch into frozen and chilled seafood, and the packaging, distribution and marketing of these products, locally and internationally.
Sea Harvest expanded its operations internationally in 2015 and, through 100% owned subsidiary Sea Harvest International (Pty) Ltd., it owns a controlling stake in Mareterram, an Australian listed agri-business that fishes, processes and packs king and tiger prawns and other by-catch for the Australian domestic and international markets, and operates a nationwide foodservice sales and distribution business.
Both Sea Harvest and Mareterram have achieved the ôgoldö standard in sustainable fishing, the Marine Stewardship Council certification in their respective fisheries. This is a key component for the sustainability of not only products, but indeed the companies.
Details of the Proposed Listing
Rationale for the Proposed Listing
The Proposed Listing will strengthen Sea HarvestÆs balance sheet by enabling it to repay third- party debt and providing Sea Harvest with the additional capital to support growth both organically and acquisitively. It is envisaged that with part of the proceeds of the Private Placement, Sea Harvest will be:
- repaying all its third-party debt of c.R303 million; and
- raising cash of c.R480 million which will supplement a revolving credit facility of up to R450 million, allowing Sea Harvest to contribute c.R930 million of capital to growth opportunities.
Sea Harvest has identified a number of growth opportunities, which include:
Organic growth - improving efficiencies and enhancing margins through further investment in vessels, plant, operations and markets;
Acquisitive growth, including:
- diversifying into other products/species within the South African fishing sector. Sea HarvestÆs excellent BBBEE credentials will allow it to play a consolidating role in the sector where BBBEE is an important part of the operating environment;
- diversifying into other local food sectors, where Sea HarvestÆs expertise in processing, branding and marketing can be utilised; and
- geographically in Australia via Mareterram. Mareterram has a stated ambition of growing in the agri-business sector.
Brimstone has invested substantial capital in supporting Sea HarvestÆs growth to date, and the Proposed Listing allows Brimstone the opportunity to release some of the capital it has contributed to Sea HarvestÆs growth by redeeming the class B and class C cumulative preference shares (ôSea Harvest Preference Sharesö) and the loans granted by Brimstone to Sea Harvest (ôSea Harvest Shareholder Loansö), in total c.R575 million.
The Proposed Listing will provide Sea Harvest with ongoing access to capital markets in order to support its growth strategy.
The Proposed Listing will also allow Sea Harvest to attract and retain management and staff through the use of tradeable instruments. This will align the interests of management and staff with those of Sea HarvestÆs shareholders.
Impact of the Proposed Listing
Brimstone currently holds 828 242 000 Sea Harvest Ordinary Shares, which represents an interest of 85% in the ordinary share capital of Sea Harvest. In addition, Brimstone has provided funding to Sea Harvest amounting to approximately R575 million, in the form of the Sea Harvest Preference Shares and the Sea Harvest Shareholder Loans.
It is BrimstoneÆs intention to retain all its Sea Harvest Ordinary Shares. In anticipation of the Private Placement, all the Sea Harvest Preference Shares are to be redeemed, resulting in Brimstone receiving a payment of approximately R520 million, as well as R55 million as a result of the repayment of the Sea Harvest Shareholder Loans.
Following the Private Placement and the consolidation of Sea Harvest Ordinary Shares in a 1:6 ratio, Brimstone will hold 138 040 333 Sea Harvest Ordinary Shares, representing an interest of approximately 52% in Sea Harvest.
Brimstone intends to continue to control Sea Harvest and, at a minimum, retain a 50.1% shareholding in Sea Harvest post the Proposed Listing.
Brimstone intends to reduce its debt funding with the proceeds received from the redemption of the Sea Harvest Preference Shares and the repayment of the Sea Harvest Shareholder Loans.
The Proposed Listing and the simultaneous Private Placement is regarded as a Category 1 transaction in terms of the JSE Listings Requirements, requiring Brimstone shareholder approval. Details of the general meeting for Brimstone shareholders (ôGeneral Meetingö) to approve the requisite resolutions are set out in paragraph below.
The Private Placement
The Private Placement is expected to comprise an offer for subscription by Sea Harvest of new ordinary shares.
Full details of the Private Placement will be disclosed in a pre-listing statement to be issued by Sea Harvest (ôSea Harvest PLSö) in due course and will also be made available on Sea HarvestÆs website at www.seaharvest.co.za. In addition, the details of the Private Placement will also be released on SENS under BrimstoneÆs share code and a copy of the Sea Harvest PLS will be available on BrimstoneÆs website (www.brimstone.co.za) at the appropriate time.
Conditions
The Proposed Listing is subject to the following conditions:
- approval by the requisite majority of Brimstone shareholders of the ordinary resolutions contained in a notice of general meeting forming part of a circular to be dispatched to Brimstone shareholders (ôthe Circularö);
- the requisite approval by the JSE for the Proposed Listing having been obtained; and
- obtaining any other regulatory consents to the extent required.
Value and profits attributable to the net assets
The value of the net assets of Sea Harvest as at 30 June 2016, the last reported date, is R214.076 million and the profits attributable to the net assets of Sea Harvest for the six months ended 30 June 2016 are R36.945 million.
Circular and salient dates and times
The Circular containing full details of the Proposed Listing, accompanied by a notice of General Meeting will be dispatched to Brimstone shareholders today. The salient dates and times are as follows:
Circular posted to Brimstone shareholders on Wednesday, 8 February 2017
Last day to trade to be entitled to vote at, and participate in the General Meeting - Tuesday, 28 February 2017
Record date to be entitled to vote at, and participate in the General Meeting - Friday, 3 March 2017
Forms of proxy to be received by 11:00 on Tuesday, 7 March 2017
General Meeting to be held at 11:00 on Thursday, 9 March 2017
Results of General Meeting to be released on SENS on Friday, 10 March 2017
Brimstone has been invested in Sea Harvest since 1998, when it acquired an initial shareholding. In 1999 it increased its shareholding to 10.76%. In 2004, Brimstone increased its interest to 21.52% and, when Tiger Brands Ltd. announced its intention to exit Sea Harvest in 2009, Brimstone led a consortium in the largest broad-based black economic empowerment (ôBBBEEö) transaction in the fishing industry and acquired control of Sea Harvest, creating one of South AfricaÆs first black industrial companies. Today, Brimstone holds 85% of Sea Harvest, with management and staff holding the remaining 15%.
Since taking control in 2009, Brimstone has invested a further c.R776 million in Sea Harvest through a combination of additional capital and reinvested profits. This growth has taken the form of organic growth whereby Sea Harvest invested considerably in upgrading its operations, and acquisitive growth whereby Sea Harvest acquired control of Mareterram Ltd. (ôMareterramö), a public company registered and incorporated in Australia and listed on the Australian Stock Exchange and in which Sea Harvest holds a 55.9% controlling interest.
Brimstone has tasked management at Sea Harvest to continue on this growth strategy and in order to do this, Sea Harvest requires capital. In order to facilitate this, Brimstone, together with the other shareholders in Sea Harvest, has resolved to proceed with a separate listing of Sea Harvest on the main board of the JSE by the end of March 2017. A capital raising of up to R1.5 billion (ôPrivate Placementö) will be undertaken by Sea Harvest simultaneously with the Proposed Listing.
Sea Harvest is one of the first black industrial companies to be listed on the JSE, a strong confirmation that transformation works in South Africa.
Importantly, Brimstone remains committed and supportive of Sea Harvest and does not intend disposing of any of the ordinary shares of Sea Harvest held by it (ôSea Harvest Ordinary Sharesö) in the Proposed Listing. Brimstone intends retaining control of Sea Harvest post the Proposed Listing.
As a result of the Proposed Listing, and the simultaneous Private Placement of up to R1.5 billion, BrimstoneÆs 85% interest in Sea Harvest will be diluted to approximately 52%.
Description of Sea Harvest
Sea Harvest is a leading, internationally recognised vertically integrated fishing and food business with operations in South Africa and Australia, servicing retail and foodservice customers in 22 countries. Established in 1964 on the Atlantic West Coast of South Africa, Sea Harvest has become a household brand and market leader in the fish category. In the 2016 Icon Brands Survey, Sea Harvest was rated as the 7th most iconic brand in South Africa and the highest scoring seafood brand.
Sea HarvestÆs principal South African business is fishing for Cape hake, processing of the catch into frozen and chilled seafood, and the packaging, distribution and marketing of these products, locally and internationally.
Sea Harvest expanded its operations internationally in 2015 and, through 100% owned subsidiary Sea Harvest International (Pty) Ltd., it owns a controlling stake in Mareterram, an Australian listed agri-business that fishes, processes and packs king and tiger prawns and other by-catch for the Australian domestic and international markets, and operates a nationwide foodservice sales and distribution business.
Both Sea Harvest and Mareterram have achieved the ôgoldö standard in sustainable fishing, the Marine Stewardship Council certification in their respective fisheries. This is a key component for the sustainability of not only products, but indeed the companies.
Details of the Proposed Listing
Rationale for the Proposed Listing
The Proposed Listing will strengthen Sea HarvestÆs balance sheet by enabling it to repay third- party debt and providing Sea Harvest with the additional capital to support growth both organically and acquisitively. It is envisaged that with part of the proceeds of the Private Placement, Sea Harvest will be:
- repaying all its third-party debt of c.R303 million; and
- raising cash of c.R480 million which will supplement a revolving credit facility of up to R450 million, allowing Sea Harvest to contribute c.R930 million of capital to growth opportunities.
Sea Harvest has identified a number of growth opportunities, which include:
Organic growth - improving efficiencies and enhancing margins through further investment in vessels, plant, operations and markets;
Acquisitive growth, including:
- diversifying into other products/species within the South African fishing sector. Sea HarvestÆs excellent BBBEE credentials will allow it to play a consolidating role in the sector where BBBEE is an important part of the operating environment;
- diversifying into other local food sectors, where Sea HarvestÆs expertise in processing, branding and marketing can be utilised; and
- geographically in Australia via Mareterram. Mareterram has a stated ambition of growing in the agri-business sector.
Brimstone has invested substantial capital in supporting Sea HarvestÆs growth to date, and the Proposed Listing allows Brimstone the opportunity to release some of the capital it has contributed to Sea HarvestÆs growth by redeeming the class B and class C cumulative preference shares (ôSea Harvest Preference Sharesö) and the loans granted by Brimstone to Sea Harvest (ôSea Harvest Shareholder Loansö), in total c.R575 million.
The Proposed Listing will provide Sea Harvest with ongoing access to capital markets in order to support its growth strategy.
The Proposed Listing will also allow Sea Harvest to attract and retain management and staff through the use of tradeable instruments. This will align the interests of management and staff with those of Sea HarvestÆs shareholders.
Impact of the Proposed Listing
Brimstone currently holds 828 242 000 Sea Harvest Ordinary Shares, which represents an interest of 85% in the ordinary share capital of Sea Harvest. In addition, Brimstone has provided funding to Sea Harvest amounting to approximately R575 million, in the form of the Sea Harvest Preference Shares and the Sea Harvest Shareholder Loans.
It is BrimstoneÆs intention to retain all its Sea Harvest Ordinary Shares. In anticipation of the Private Placement, all the Sea Harvest Preference Shares are to be redeemed, resulting in Brimstone receiving a payment of approximately R520 million, as well as R55 million as a result of the repayment of the Sea Harvest Shareholder Loans.
Following the Private Placement and the consolidation of Sea Harvest Ordinary Shares in a 1:6 ratio, Brimstone will hold 138 040 333 Sea Harvest Ordinary Shares, representing an interest of approximately 52% in Sea Harvest.
Brimstone intends to continue to control Sea Harvest and, at a minimum, retain a 50.1% shareholding in Sea Harvest post the Proposed Listing.
Brimstone intends to reduce its debt funding with the proceeds received from the redemption of the Sea Harvest Preference Shares and the repayment of the Sea Harvest Shareholder Loans.
The Proposed Listing and the simultaneous Private Placement is regarded as a Category 1 transaction in terms of the JSE Listings Requirements, requiring Brimstone shareholder approval. Details of the general meeting for Brimstone shareholders (ôGeneral Meetingö) to approve the requisite resolutions are set out in paragraph below.
The Private Placement
The Private Placement is expected to comprise an offer for subscription by Sea Harvest of new ordinary shares.
Full details of the Private Placement will be disclosed in a pre-listing statement to be issued by Sea Harvest (ôSea Harvest PLSö) in due course and will also be made available on Sea HarvestÆs website at www.seaharvest.co.za. In addition, the details of the Private Placement will also be released on SENS under BrimstoneÆs share code and a copy of the Sea Harvest PLS will be available on BrimstoneÆs website (www.brimstone.co.za) at the appropriate time.
Conditions
The Proposed Listing is subject to the following conditions:
- approval by the requisite majority of Brimstone shareholders of the ordinary resolutions contained in a notice of general meeting forming part of a circular to be dispatched to Brimstone shareholders (ôthe Circularö);
- the requisite approval by the JSE for the Proposed Listing having been obtained; and
- obtaining any other regulatory consents to the extent required.
Value and profits attributable to the net assets
The value of the net assets of Sea Harvest as at 30 June 2016, the last reported date, is R214.076 million and the profits attributable to the net assets of Sea Harvest for the six months ended 30 June 2016 are R36.945 million.
Circular and salient dates and times
The Circular containing full details of the Proposed Listing, accompanied by a notice of General Meeting will be dispatched to Brimstone shareholders today. The salient dates and times are as follows:
Circular posted to Brimstone shareholders on Wednesday, 8 February 2017
Last day to trade to be entitled to vote at, and participate in the General Meeting - Tuesday, 28 February 2017
Record date to be entitled to vote at, and participate in the General Meeting - Friday, 3 March 2017
Forms of proxy to be received by 11:00 on Tuesday, 7 March 2017
General Meeting to be held at 11:00 on Thursday, 9 March 2017
Results of General Meeting to be released on SENS on Friday, 10 March 2017
Brimstone Investment Corporation Limited published this content on 08 February 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 08 February 2017 08:21:04 UTC.
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