Purpose of the rights offer
The purpose of the Rights Offer is to provide Taste with additional capital of up to R226 393 428 so as to realise the opportunities of:
Starbucks
As set out in the announcement released on SENS on 14 July 2015, wherein it was disclosed that a subsidiary of Taste had signed an exclusive development agreement to develop Starbucks outlets in South Africa, Taste envisages establishing 12 to 15 outlets within the first 24 months from the first store opening, which store is scheduled for the first half of 2016. The Company will incur once-off and upfront costs relating to initial training and travel, employment costs of a dedicated Starbucks team well in advance of the first store opening, pre-opening marketing and market research and establishing IT and other infrastructure. It is currently estimated these costs may amount to R29 million, R25 million of which may be incurred in this financial year.
The capital expenditure and pre-opening expenses for the first 12 to 15 stores is estimated at R108 million. The market opportunity is estimated at 150 to 200 outlets, at a current estimated capital expenditure per store of R3 million to R10 million. This initial measured roll-out should result in the business unit achieving EBITDA breakeven during the second year after the first store opening. It is anticipated that a future store growth of 20 stores per annum could be funded through internally generated funds and debt. The target ten year internal rate of return at store level is 30%.
Since 1971, Starbucks has been committed to ethically sourcing and roasting high- quality Arabica coffee. Today, with more than 22 000 stores around the globe, Starbucks is the premier roaster and retailer of specialty coffee in the world. The license agreement gives Taste the exclusive rights to develop Starbucks outlets in South Africa. As Taste is the licensee, it will own and operate the stores directly. Including renewal options, the agreement is for 25 years and includes certain rights for other African countries, subject to certain conditions.
Arthur Kaplan
As set out in the announcement released on SENS on 21 October 2014, Taste acquired the business of Arthur Kaplan, thereby becoming the leading retailer (by number of outlets) of luxury Swiss watch brands in South Africa. Arthur Kaplan has exceeded the Company’s expectations in both sales and profit performance since acquisition and is poised for growth as overheads are largely fixed for the next five stores. Additionally, the opportunities identified during the due diligence and expressed as part of the acquisition rationale are materialising and include expanding the Arthur Kaplan footprint through:
- opening new premium watch and jewellery outlets (which costs of shopfitting and inventory investment range from R7 million to R15 million per outlet, depending on the range of brands in the outlet), the first of which is scheduled for April 2016;
- refurbishing three existing outlets (at a cost of R1.5 million to R3 million per refurbishment) and placing new premium watch brands into existing outlets (at an inventory investment of R2 million to R7 million per brand with an estimated return on investment in excess of 50%); and
- acquisition and conversion of attractively valued independent jewellers that operate in the same consumer segment to the Arthur Kaplan brand. Purchase price estimates are between R15 million and R30 million per outlet.
Salient terms of the rights offer
In terms of the Rights Offer, Taste will offer a total of 75 464 476 Rights Offer Shares at a subscription price of 300 cents per Rights Offer Share in the ratio of 25 Rights Offer Shares for every 100 shares held in Taste on the close of business on the Record Date. Qualifying Shareholders will have the right to apply for Rights Offer Shares in excess of their entitlements, on the same terms and conditions as those applicable in terms of their entitlements.
Upon their issue, the Rights Offer Shares will rank pari passu in all respects with the existing Taste Shares.
Salient dates and times
- Rights Offer Declaration Data announcement released on SENS - Tuesday, 13 October
- Rights Offer Finalisation announcement released on SENS - Friday, 16 October
- Last day to trade in Taste Shares in order to settle trades by the Record Date for the Rights Offer and to qualify to participate in the Right Offer (cum entitlement) on - Friday, 23 October
- Listing of and trading in the Letters of Allocation on the JSE under JSE code TASN and ISIN ZAE000210092 commences at 09:00 on - Monday, 26 October
- Taste Shares commence trading ex-rights on the JSE at 09:00 on - Monday, 26 October
- Circular and Form of Instruction posted to Certificated Shareholders - Tuesday, 27 October
- Record date for the Rights Offer for purposes of determining the Taste Shareholders entitled to participate in the Rights Offer at the close of business on - Friday, 30 October
- Rights Offer opens at 09:00 on - Monday, 2 November
- Holders of Dematerialised Taste Shares will have their accounts at their CSDP or broker automatically credited with their Letters of Allocation on - Monday, 2 November
- Holders of Certificated Taste Shares will have their Letters of Allocation credited to an electronic register at the Transfer Secretaries on - Monday, 2 November
- Circular distributed to Dematerialised Shareholders, who have elected to receive such documents - Tuesday, 3 November
- Last day to trade in Letters of Allocation in order to settle trades by the Record Date for the Letters of Allocation and participate in the Rights Offer at the close of business on - Friday, 6 November
- Last day for Form of Instruction to be lodged with the Transfer Secretaries by holders of Certificated Taste Shares wishing to sell all or part of their Rights Offer Entitlement by 12:00 on - Friday, 6 November
- Listing and trading of Rights Offer Shares commences on the JSE at 09:00 on - Monday, 9 November
- Last day for Form of Instruction to be lodged with the Transfer Secretaries by holders of Certificated Taste Shares wishing to subscribe for or renounce all or part of their Rights Offer Entitlement by 12:00 on - Friday, 13 November
- Record date for Letters of Allocation - Friday, 13 November
- Rights Offer closes at 12:00 and payment to be made on - Friday, 13 November
- CSDP/broker accounts credited with Rights Offer Shares and debited with the payments due in respect of holders of Dematerialised Taste Shares on - Monday, 16 November
- Rights Offer Share certificates in terms of the Rights Offer posted to holders of Certificated Taste Shares via registered post on or about - Monday, 16 November
- Results of Rights Offer announced on SENS on Monday, 16 November
- CSDP/broker accounts credited with excess Rights Offer Shares, where applicable, and debited with the payments due in respect of holders of Dematerialised Taste Shares on - Wednesday, 18 November
- Rights Offer Share certificates in terms of the excess Rights Offer Shares, where applicable, posted to holders of Certificated Taste Shares via registered post on or about - Wednesday, 18 November
- Refund cheques posted to holders of Certificated Taste Shares in respect of unsuccessful applications via registered post on or about - Wednesday, 18 November
Notes:
- The above dates and times, which times are local times in South Africa, are subject to amendment. Any such amendment will be released on SENS.
- Holders of Dematerialised Taste Shares are required to notify their CSDP or broker of the action they wish to take in respect of the Rights Offer in the manner and by the time stipulated in the agreement governing the relationship between the Dematerialised Shareholder and his CSDP or broker.
- Taste share certificates may not be dematerialised or rematerialised between Monday, 26 October 2015 and Friday, 30 October 2015, both days inclusive.
- CSDPs effect payment in respect of holders of Dematerialised Rights Offer Shares on a delivery versus payment basis.
- To the extent that the rights are accepted, Dematerialised Shareholders will have their accounts at their CSDP automatically credited with their rights and Certificated Shareholders will have their rights credited to an account at Computershare Investor Services.
- Rights Offer share certificates to be issued in terms of the Rights Offer will be posted to persons entitled thereto, by registered post, at the risk of the Certificated Shareholders concerned.
Restriction on the rights offer
Any Shareholder resident outside the Common Monetary Area, being the Republics of South Africa and Namibia and the Kingdoms of Lesotho and Swaziland, who receives the Rights Offer circular and accompanying form of instruction, should obtain advice as to whether any governmental and/or any other legal consent is required and/or any other formality must be observed to enable such a subscription to be made in terms of such form of instruction.
The Rights Offer does not constitute an offer in any jurisdiction in which it is illegal to make such an offer and the Rights Offer circular and accompanying form of instruction should not be forwarded or transmitted any person in any territory other than where it is lawful to make such an offer.
The Rights Offer Shares have not been and will not be registered under the Securities Act of the United States of America. Accordingly, the Rights Offer Shares may not be offered, sold, resold, delivered or transferred, directly or indirectly, in or into the United States or to, or for the account or benefit of, United States persons, except pursuant to exemptions from the Securities Act. The Rights Offer circular and the accompanying documents are not being, and must not be, mailed or otherwise distributed or sent in, into or from the United States. The Rights Offer circular does not constitute an offer of any securities for sale in the United States or to United States persons.
The Rights Offer contained in the Rights Offer circular does not constitute an offer in the District of Columbia, the United States, the Dominion of Canada, the Commonwealth of Australia, Japan or in any other jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer (“Non-qualifying Shareholder”). Non-qualifying Shareholders should consult their professional advisers to determine whether any governmental or other consents are required or other formalities need to be observed to allow them to take up the Rights Offer, or trade their entitlement. To the extent that Non- qualifying Shareholders are not entitled to participate in the Rights Offer, such Non- qualifying Shareholders should not take up their Rights Offer entitlement or trade in their Rights Offer entitlement and should allow their rights in terms of the Rights Offer to lapse.
Further announcement circular
The Rights Offer Finalisation Announcement is expected to be released on SENS on or about 16 October 2015.
The Rights Offer circular, and accompanying form of instruction for use by certificated Shareholders only, containing full particulars of the Rights Offer will be posted to shareholders on or about 27 October 2015. The Rights Offer circular containing full particulars of the Rights Offer will be distributed to dematerialised Shareholders who have elected to receive such documents on or about 3 November 2015.
Click here for original article
