SPUR CORPORATION LIMITED - Issue of shares for cash donation of Spur Shares and further cautionary announcement
31 July 2014 8:00
SUR 201407310003A
Issue of shares for cash, donation of Spur Shares and further cautionary announcement

(Incorporated in the Republic of South Africa)
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE 000022653
(“Spur” or “the company”)






Shareholders are advised that Spur has entered into various agreements to
issue ordinary shares to Grand Parade Investments Limited (“GPI”,
registration number 1997/003548/06), a strategic black empowerment partner,
and is separately seeking approval to donate a material number of Spur
shares, currently held as treasury shares, to the Spur Foundation.
Shareholders should note that the B-BBEE Transaction and B-BBEE Donation,
as set out in sections A and B of this announcement respectively, are
independent of one another and are therefore not inter-conditional.


1. Introduction

The company has entered into definitive agreements with GPI, a black owned
and controlled company listed on the JSE Limited (“JSE”), in terms of which
a wholly owned subsidiary of GPI (“BEECo”) will subscribe for 10 848 093
ordinary issued shares of the company (“Spur Shares”), constituting 10% of
the post B-BBEE Transaction issued share capital of Spur (the “B-BBEE

2. Salient terms of the B-BBEE Transaction

In terms of the B-BBEE Transaction:

  2.1.     Spur   will   allot   and  issue    10 848 093  new   Spur   shares
           (“Subscription   Shares”)  to    BEECo   (the  “Specific   Issue”),
           representing 10% of the total share capital of Spur post issuance,
           as a specific issue of shares for cash and for a total
           subscription price of R294.66 million (the “Subscription Price”);

  2.2.     The Subscription Price equates to an issue price of R27.16 per
           Spur Share which represents a 10.0% Broad-based Black Economic
           Empowerment (“B-BBEE”) lock-in discount to the volume weighted
           average trading price of Spur shares on the JSE for the 90 trading
           days prior to 30 July 2014; and

  2.3.     GPI and BEECo will be restricted from trading the Subscription
           Shares without the express permission of Spur for a period of 5
           years from the effective date of the B-BBEE Transaction (“Lock-in
           Period”). Both GPI and BEECo are required to maintain their B-BBEE
           credentials in terms of the B-BBEE Codes of Good Practice
           throughout the Lock-in Period and will be free to trade the
           Subscription Shares once the Lock-in Period has lapsed;

  2.4.     In terms of the agreements between the parties, Spur (or its
           nominee) will under certain circumstances, such as breach by GPI
           of its empowerment obligations to Spur, have the right to acquire
           some or all of the Subscription Shares during the Lock-in Period.
           This may result therein that Spur shall repurchase Subscription
           Shares by means of a specific repurchase (“the Potential Specific

  2.5      Funding the B-BBEE Transaction:

           The B-BBEE Transaction will be funded through a combination of
           cash and preference share funding as follows:

   2.5.1   The Standard Bank of South Africa Limited will partially fund the
           B-BBEE Transaction through a subscription for A class and B class
           preference shares in BEECo with a combined subscription value of
           R150.0 million (the “Bank Funding”). The Bank Funding will be
           secured, inter alia, by the Subscription Shares;

   2.5.2   Spur will partially fund the B-BBEE Transaction through a
           subscription for C class preference shares with a combined
           subscription value of R72.33 million in BEECo (the “Spur
           Funding”). The C Class preference shares will accrue dividends at
           a rate of 90% of the prevailing prime overdraft rate of interest.
           The C class preference shares will be subordinated to the A class
           and B class preference shares issued in terms of the Bank Funding
           and will be secured by a cession of BEECo’s reversionary interest
           in the Subscription Shares (subsequent to being utilised to
           extinguish any liability arising from the A class and B class
           preference shares). The Spur Funding will provide 24.5% of the
           funding requirement of BEECo for the Specific Issue; and

   2.5.3   GPI will provide the balance of the funding required, being
           R72.33 million, from existing cash resources.

The B-BBEE Transaction will result in a net cash inflow of R222.33 million
to Spur (“Subscription Proceeds”).

In terms of the B-BBEE Transaction GPI will, subject to compliance with the
JSE Listings Requirements and ratification by shareholders, be entitled to
nominate and appoint one non-executive director to Spur’s board of

3. Rationale

   It is envisaged that the implementation of the B-BBEE Transaction will
   improve the company’s B-BBEE credentials over the long-term and thereby
   ensure that it will continue to maintain its competitive advantage. The
   board of directors estimates that the B-BBEE shareholding post the B-
   BBEE Transaction (and the B-BBEE Donation) will be in excess of 10%.
   The B-BBEE Transaction furthermore addresses the impact of legislative

   The B-BBEE Transaction is aimed at securing meaningful empowerment
   credentials for Spur which are necessary from a commercial perspective
   in obtaining trading and liquor licences from regulatory authorities,
   and in tendering for restaurant sites where property developers and
   landlords increasingly require both the franchisee and franchisor to
   meet B-BBEE requirements.

   The B-BBEE Transaction is also aimed at promoting the company’s
   sustainability   and  ensuring   that  it   remains   relevant  to   all
   stakeholders, including its extensive middle market customer base spread
   across South Africa.

   The directors of Spur believe that GPI is a true commercial partner in
   addition to being a B-BBEE shareholder. GPI has shown its commitment to
   the transaction and to the success of the relationship by investing in a
   sizeable shareholding in Spur, thereby aligning its interests with those
   of Spur.

   As both companies operate in the food and hospitality industry there are
   potential synergies that can be gained, particularly in supply chain and
   product manufacture.

   GPI is a well-established black owned and black managed company that has
   demonstrated its ability to contribute to community upliftment by
   empowering a broad base of beneficiaries at grassroots level.

4. Description of the business carried on by Spur

   Spur is a growing multi-brand restaurant franchisor, headquartered in
   Cape Town, and listed in the travel and leisure sector of the JSE. The
   Spur group franchises four table service sit down restaurant brands
   including Spur Steak Ranches, Panarottis Pizza Pasta, John Dory’s Fish
   Grill Sushi and The Hussar Grill Steakhouse. Spur is also the
   franchisor of Captain DoRegos, a quick service convenience chain which
   it acquired in March 2012.

5. Background information on GPI

   GPI is a Western Cape-based, broad-based black owned and controlled
   company historically focussed on non-operated investments in the South
   African hospitality and gaming industry. In recent years, GPI has also
   positioned itself to take advantage of high growth opportunities beyond
   this sector, particularly where there are strong synergies with
   existing investments, while maintaining a core focus on maximising the
   potential of new and existing hospitality related investments.

   GPI currently holds investments in the following key assets:

      -   25.1% of SunWest Proprietary Limited, the holding company of
          GrandWest Casino, the Table Bay Hotel and a minority interest in
          the Cape Town International Convention Centre;
      -    25.1% of Golden Valley Casino and Hotel;

      -    100.0% of GPI Slots – the Limited Payout Machine operated with
           Route Operator licences in the Western Cape, KwaZulu-Natal,
           Gauteng and Mpumalanga;

      -    5.6% effective holding of Sibaya Casino;

      -    91% of Burger King SA; and

      -    65% of MacBrothers Catering Equipment Proprietary Limited.

   GPI has entered into formal agreements to divest of its holding in
   SunWest Proprietary Limited and the Golden Valley Casino and Hotel, 70%
   of GPI Slots over a three year period and its entire 5.6% holding in
   Sibaya Casino. Additional information can be found on GPI’s website.

6. The Effective Date of the B-BBEE Transaction

   In terms of the B-BBEE Transaction agreements, the effective date and
   the closing date of the Transaction will be the fifth business day
   following the fulfilment or waiver of the conditions precedent which
   are detailed below.

7. Conditions precedent

   The B-BBEE Transaction is subject to certain conditions precedent,
   which are considered customary for a transaction of this nature and
   include, but are not limited to, the following:

     i.      Approval to the extent required by the shareholders of Spur of
             the B-BBEE Transaction by no later than 31 October 2014;

     ii.     Approval to the extent required by the shareholders of Spur of
             the Spur Funding by no later than 31 October 2014;

     iii.    Approval by the JSE of the listing of the Subscription Shares;

     iv.     Fulfilment of conditions precedent to the implementation of the
             Spur Funding, Bank Funding and related agreements, by no later
             than 31 October 2014; and

     v.      Confirmation by GPI that no material adverse change has taken
             place within Spur.

8. Warranties and indemnities

   The B-BBEE Transaction is subject to warranties and indemnities that
   are normal for a transaction of this nature.

9. Application of the Subscription Proceeds

   Spur intends to apply the Subscription Proceeds towards enhancing its
   African support structure, seeking strategic acquisition opportunities
   in related businesses, expanding and upgrading the company’s existing
   manufacturing facilities, the construction of additional head office
   building space and pursuing vertical integration of manufacturing
   facilities related to core products used in its restaurant operations.

10. Required Shareholder Approval

   10.1. In terms of paragraph 5.51(g) of the Listings Requirements of the
         JSE, the specific issue of shares for cash requires the approval
         by way of an ordinary resolution (requiring at least a 75%
         majority of the votes cast in favour of such resolution) by all
         Spur shareholders present or represented by proxy at a general

   10.2. In terms of sections 44 and 45 of the Companies Act, No. 71 of
         2008, as amended (“Companies Act”), the Spur Funding will or may
         constitute financial assistance as contemplated in the Companies
         Act, and, as such, requires approval by way of a special
         resolution by all Spur shareholders present or represented by
         proxy at a general meeting; and

   10.3. In terms of the Companies Act and the Listings Requirements of
         the JSE the Potential Specific Repurchase requires approval by
         way of a special resolution by all Spur shareholders present or
         represented by proxy at a general meeting.


1. Introduction

   On 18 July 2012, in honour of Mandela Day, Spur established The Spur
   Foundation (the “Foundation”), with a cash donation of R670 000 from
   its wholly-owned subsidiary, Spur Group Proprietary Limited.

   The Spur Foundation supports initiatives that assist children in
   impoverished communities by administering feeding schemes and providing
   basic necessities and amenities. The Foundation also ties in with
   Spur’s business and its existing alignment with FoodBank.

   Current beneficiaries of the Spur Foundation include the Teddy Bear
   Clinic, Joint Aid Management (JAM), Sisanda Fundaytion, Creating
   Change, Reach for a Dream, FoodBank, ASHA Trust, Solomon’s Haven (a
   safe house in Mitchells Plain), and Durban Children’s Home.

   The Spur Foundation is a benevolent public benefit organisation and is
   in possession of a section 18A tax certificate. The original donation
   was a finite amount and whilst the group continues to make smaller
   donations to the Spur Foundation each year, its limited resources will
   soon run out. The intention is for the Spur Foundation to partner with
   its beneficiaries in order to provide on-going support and in order to
   do this, it needs annuity income.

2. Details of the B-BBEE Donation

   As part of Spur’s corporate social responsibility initiative, the board
   of directors of Spur has approved the donation of 100 000 Spur shares
   per annum for five consecutive years to the Spur Foundation in order to
   provide the Spur Foundation with the annuity income it needs to sustain
   its charitable activities. The shares to be donated are currently held
   as treasury shares.

3. Required Shareholder Approval

   The issue of the 500 000 treasury shares to the Foundation constitutes
   a specific issue of shares to a related party and, as it will be a
   donation, the discount to market price at which it will be issued will
   in effect be 100%. The dilution as a result of the specific issue will
   be 0.51%. The B-BBEE Donation is subject to shareholder approval at a
   general meeting and in terms of the Listings Requirements the board
   should obtain an opinion from an independent expert on the donation
   from which it appears whether it is fair to shareholders.

4. Fairness and Reasonableness

   Schedule 5 of the Listings Requirements determines that the fairness of
   a transaction is evaluated by considering quantitative issues, such as
   the value of the underlying asset and the consideration payable in
   respect thereof, whereas the reasonableness of a transaction is
   determined by taking into consideration other significant qualitative

   Under the circumstances it is clear that the specific issue of the Spur
   Foundation shares as a donation will not be fair, as no consideration
   is payable by the Spur Foundation for the Spur Foundation shares, and
   that it will not be possible to obtain an opinion from an independent
   expert on the proposed issue that will determine that it is fair to
   shareholders.    The board however believes that the donation is
   reasonable when giving consideration to qualitative issues such as the
   nature and purpose of the Spur Foundation and its endeavours and those
   shareholders should be able to vote on the issue, despite it not being


The financial effects of the B-BBEE Transaction, the Spur Funding, the
Potential Specific Repurchase and the B-BBEE Donation have not been

Shareholders are referred to the cautionary announcement dated 26 March
2014 and the subsequent renewals of same on 14 May 2013 and 26 June 2014,
and are hereby advised to continue to exercise caution when dealing in the
company’s securities until a further announcement is made.


A general meeting of Spur shareholders will be held to consider and, if
deemed fit, to pass, with or without modification, the resolutions required
to approve the B-BBEE Transaction, the Spur Funding, the Potential Specific
Repurchase and the BEE Donation (“the General Meeting”). A circular
containing full details of the transactions set out in this announcement
and convening the General Meeting will be posted to shareholders in due

31 July 2014
Sasfin Capital

Corporate Advisor
Leaf Capital

Legal Advisor
Bernadt Vukic Potash & Getz

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