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AFRICAN EQUITY EMPOWERMENT INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/006093/06)
ISIN: ZAE000195731
Share code: AEE
("AEEI" or “the Company” or “the Group”)
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN OR INTO CANADA OR ANY OTHER STATE OR JURISDICTION IN WHICH SUCH
RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
PLEASE SEE THE IMPORTANT DISCLAIMERS AT THE END OF THIS ANNOUNCEMENT.
_________________________________________________________________________________
DECLARATION ANNOUNCEMENT REGARDING THE UNBUNDLING BY AEEI OF ITS
SHAREHOLDING IN AYO TECHNOLOGY SOLUTIONS LIMITED
1 INTRODUCTION
1.1 Shareholders of AEEI (“AEEI Shareholders”) are referred to the announcement published
on the Stock Exchange News Service (“SENS”) on 31 January 2023 wherein they were
advised that the board of directors of AEEI (“Board”) was deliberating the potential
unbundling of one of the Company’s assets. AEEI Shareholders are hereby advised that on
19 January 2023, the Board resolved to unbundle AEEI’s entire shareholding in AYO
Technology Solutions Limited (“AYO”), being 169 866 829 ordinary shares in AYO (“AYO
Shares”) to AEEI Shareholders (“Unbundling”).
1.2 The Unbundling comprises the distribution of 49.36% of the total issued share capital of AYO,
by way of a pro rata distribution in specie, in the ratio of 1 AYO Share for every 2.89 shares
in AEEI (“AEEI Shares”) held on the Unbundling record date. Based on AYO’s current share
price of R3.00, the value of the AYO Shares being distributed to AEEI Shareholders is
approximately R509 600 487.00, which is equivalent to R1.04 per AEEI Share.
1.3 The implementation of the Unbundling is subject to the fulfilment of customary conditions
precedent for transactions of this nature (such as obtaining the requisite regulatory approvals)
and the approvals as specifically set out in paragraph 3 below, the last of which is expected
to be obtained, and all conditions precedent consequently fulfilled by Tuesday, 20 June 2023.
The purpose of this announcement is to provide AEEI Shareholders with declaration
information on the implementation of the Unbundling in accordance with the Listings
Requirements of the Johannesburg Stock Exchange Limited (“JSE”) and the Companies Act,
No. 71 of 2008 as amended (“Companies Act”).
1.4 This announcement comprises the formal transaction announcement in respect of the
Unbundling and is intended to provide AEEI Shareholders with the full terms of the
Unbundling. Prior to any AEEI Shareholder taking any action in respect of the
Unbundling, AEEI Shareholders are advised to carefully consider the contents of this
announcement in full, including the information to be incorporated in the Circular, and
to only take action after having done so and subject to the passing of the Unbundling
Resolution referred to in paragraph 3.1.1 below. If you are in doubt of what action you
should take in respect of the Unbundling, please consult your broker, legal adviser,
CSDP or other professional adviser.
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2 IN SPECIE DISTRIBUTION DECLARATION
2.1 Subject to the fulfilment of the outstanding conditions precedent, pursuant to the Unbundling
by way of a pro rata distribution in specie in terms of section 46(1)(a)(ii) of the Companies
Act and section 46 of the Income Tax Act, No. 58 of 1962 as amended (“Income Tax Act”),
AEEI will unbundle 169 866 829 AYO Shares (“Unbundled AYO Shares”), comprising
49.36% of the issued ordinary share capital of AYO.
2.2 The Board has resolved to implement the Unbundling, subject to the fulfilment of the
outstanding conditions precedent, in accordance with the provisions of AEEI’s memorandum
of incorporation and the expected salient dates and times set out in paragraph 5 below.
2.3 Subject to the terms and conditions set out herein, including the passing of the Unbundling
Resolution, each AEEI Shareholder is expected to receive the Unbundled AYO Shares
(which are listed on the securities exchange operated by the JSE), as a pro rata payment in
terms of paragraph 5.85(b) of the JSE Listings Requirements, in the distribution entitlement
ratio illustrated below:
For every 2.89 AEEI Shares => 1 Unbundled AYO Shares
Share code: AYO
ISIN: ZAE000252441
2.4 The distribution of the Unbundled AYO Shares to AEEI Shareholders in accordance with the
distribution entitlement ratio set out above, could result in fractional entitlements for such
AEEI Shareholders. Further detail on the treatment of fractional entitlements is set out in
paragraph 6 below.
2.5 AEEI Shareholders who transfer or dispose of their AEEI Shares prior to the last day to trade
AEEI Shares in order to participate in the Unbundling, currently expected to occur on
Tuesday, 27 June 2023 will not participate in the Unbundling and will not receive the
Unbundled AYO Shares.
2.6 The Unbundling will NOT involve an election on the part of AEEI Shareholders including a
cash election and, accordingly, no AEEI Shareholders shall be entitled to elect to receive
cash in lieu of their entitlement to receive the Unbundled AYO Shares in terms of the
Unbundling.
2.7 Following the implementation of the Unbundling, AEEI and AYO will each remain listed on
the Main Board of the JSE.
3 SECTION 112 DISPOSAL
3.1 AEEI Shareholders are further advised that the Unbundling constitutes a proposal to dispose
of the greater part of the assets of AEEI in terms of section 112 of the Companies Act
(“Section 112 Disposal”). Accordingly, the Unbundling is subject to, inter alia:
3.1.1 the TRP having issued a compliance certificate in relation to the Section 112 Disposal in
terms of section 119(4) of the Companies Act;
3.1.2 the approval thereof by the requisite majority (“Unbundling Resolution”), being 75% of AEEI
Shareholders (as contemplated in section 115(2) of the Companies Act) entitled to exercise
voting rights, in general meeting, called for such purpose and at which sufficient persons are
present to exercise, in aggregate at least 25% of all the voting rights that are entitled to be
exercised in respect of the Unbundling; and
3.1.3 AEEI having obtained all such other statutory and regulatory approvals for the Section 112
Disposal (including but not limited to any approvals required by or from the JSE.
3.2 Accordingly, the Unbundling requires a circular to AEEI Shareholders (“Circular”)
incorporating, inter alia, pro forma financial effects of the Unbundling, a fairness opinion
obtained from an independent expert and a notice to convene a general meeting of AEEI
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Shareholders in order to consider and, if deemed fit to pass, with or without modification, the
resolutions necessary to approve and implement the Unbundling.
The Circular containing full details of the Unbundling will be distributed to AEEI Shareholders
in accordance with the expected salient dates and times set out in paragraph 5 below.
3.3 Independent Expert and Fairness Opinion
In accordance with regulation 90(1) of the Companies Regulations promulgated under the
Companies Act (which includes the “Takeover Regulations” issued pursuant to sections 120
and 223 of the Companies Act) (“Companies Regulations”), AEEI’s independent board,
consisting of Wils Raubenheimer (Chairperson), Bongikhaya Qama and Stephen Nthithe
(“Independent Board”), will appoint an independent expert who meets the requirements set
out in section 114(2) of the Companies Act (“Independent Expert”) to issue an opinion
regarding the Unbundling and to make appropriate recommendations to the Independent
Board in the form of a fair and reasonable opinion as contemplated in sections 114(3) of the
Companies Act and regulation 110(1) of the Companies Regulations on whether the
Unbundling is fair and reasonable to Shareholders.
The substance of the external advice received from the Independent Expert and the views of
the Independent Board will be detailed in the Circular referred to in paragraph 3.2 above.
4 RATIONALE FOR THE UNBUNDLING
4.1 AEEI constantly evaluates the optimal composition of its investment portfolio to ensure that
it remains an attractive and appropriately rated permanent capital investment vehicle for AEEI
Shareholders. It is important to AEEI to ensure that the portfolio composition is shaped by a
long-term perspective on AEEI Shareholder value creation.
4.2 With three JSE-listed entities forming part of the AEEI group, namely AEEI, AYO and Premier
Fishing and Brands Limited (“AEEI Group”), considerable administration constraints, costs
and challenges are placed on AEEI and its constituents. The Board has resolved in favour of
the Unbundling for reasons including, but not limited to, the following:
4.2.1 the creation of an efficient and agile corporate structure with regulatory robustness and
structural alignment to AEEI’s strategy;
4.2.2 significant cost savings in terms of management fees and shared services; and
4.2.3 unlocking additional value for AEEI Shareholders as AEEI’s share price is currently trading
below the net asset value.
5 SALIENT DATES AND TIMES
2023
Record date for AEEI Shareholders to be recorded in the Friday, 24 March
register in order to receive the Circular and notice of general
meeting
Circular incorporating the notice of general meeting and form of Friday, 31 March
proxy distributed to AEEI Shareholders on
Announcement of distribution of Circular and notice convening Friday, 31 March
the general meeting published on SENS on
Announcement of distribution of Circular and notice convening Monday, 3 April
the general meeting published in the South African press on
Last day to trade in AEEI Shares in order to be recorded in the Monday, 24 April
register to vote at the general meeting on
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2023
Record date for AEEI Shareholders to be registered in the Friday, 28 April
register in order to be eligible to attend and participate in the
general meeting and to vote thereat, by close of trade on
For administrative purposes, forms of proxy in respect of the Wednesday, 3 May
general meeting to be lodged at the Transfer Secretaries by
10h00 on
Last day for AEEI Shareholders to give notice to AEEI objecting, Friday, 5 May
in terms of section 164(3) of the Companies Act, to the
Unbundling to be able to invoke appraisal rights by 10h00 on
General meeting to be held at 10h00 on Friday, 5 May
Results of the general meeting published on SENS on Friday, 5 May
Results of the general meeting published in the South African Monday, 8 May
press on
Last date on which AEEI Shareholders who voted against the Friday, 12 May
Unbundling may require AEEI to seek court approval in terms of
section 115(3)(a) of the Companies Act, but only if the
Unbundling was opposed by at least 15% of the voting rights
exercised thereon
Last date on which AEEI Shareholders who voted against the Friday, 19 May
Unbundling may make application to the court in terms of
section 115(3)(b) of the Companies Act for leave to apply for a
review of the Unbundling
Finalisation announcement published on SENS on Tuesday, 20 June
Finalisation announcement published in the South African press Wednesday, 21 June
on
Last day to trade AEEI Shares in order to be recorded in the Tuesday, 27 June
register to participate in the Unbundling (“Unbundling LDT”)
Shares trade ‘ex’ the entitlement to the Unbundled AYO Shares Wednesday, 28 June
Announcement in respect of the apportionment of base costs of Thursday, 29 June
AEEI and the cash value of fractional entitlements in relation to
the Unbundling for taxation purposes
Unbundling record date (“Unbundling Record Date”) Friday, 30 June
Announcement in respect of the closing price after market Friday, 30 June
closes
Completion date - AEEI Shareholder CSDP or broker accounts Monday, 3 July
updated to reflect the Unbundled AYO Shares and payment of
fractional entitlement
Unbundled AYO Share certificates posted by registered post at Monday, 3 July
the risk of such certificated AEEI Shareholders on or about
Notes:
1. The above dates and times are subject to such changes as may be agreed to and approved by
the TRP and/or the JSE, if required.
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2. Completed forms of proxy and the authority (if any) under which they are signed must be (i) lodged
with, posted or emailed to the Transfer Secretaries, JSE Investor Services Proprietary Limited, at
Fifth Floor, One Exchange Square, Gwen Lane, Sandown, 2196 (PO Box 4844, Johannesburg,
2000), or via email at meetingservices@jseinvestorservices.co.za, to be received by them, for
administrative purposes, by no later than 10:00 on Wednesday, 3 May 2023 or (ii) thereafter
emailed to the Transfer Secretaries at the aforementioned email address (for the attention of the
chairperson of the general meeting) at any time before the proxy exercises any rights of the AEEI
Shareholder at such general meeting.
3. AEEI Shareholders should note that, as trade in AEEI Shares on the JSE is settled in the electronic
settlement system used by Strate, settlement of trades takes place 3 (three) Business Days after
the date of such trades. Therefore, AEEI Shareholders who acquire AEEI Shares on the JSE after
the voting last day to trade, expected to be on Monday, 24 April 2023 being the last day to trade
in AEEI Shares so as to be recorded in the register on the Unbundling voting record date, will not
be entitled to vote at the General Meeting.
4. AEEI Shareholders who wish to exercise their appraisal rights should refer to the relevant
Annexure to the Circular for purposes of determining the relevant timing for the exercise of their
appraisal rights.
5. The exercise of appraisal rights may result in changes to the above salient dates and times and
AEEI Shareholders will be notified of the applicable dates and times resulting from any such
changes.
6. AEEI Shareholders who wish to exercise their right in terms of section 115(3) of the Companies
Act, to require the approval of a court for the Unbundling should refer to the relevant Annexure to
the Circular which will include an extract of section 115 of the Companies Act. Should AEEI
Shareholders exercise their rights in terms of section 115(3) of the Companies Act, the dates and
times set out above may change, in which case an updated timetable will be released on SENS.
7. Dematerialised AEEI Shareholders, other than those with own-name registration, will be required
to provide their CSDP or broker with their instructions for voting at the general meeting by the cut-
off time and date stipulated by their CSDP or broker in terms of their respective Custody
Agreements between them and their CSDP or broker.
8. No dematerialisation or rematerialisation of AEEI Shares may take place from the commencement
of business on the Business Day following the Unbundling LDT up to an including the Unbundling
Record Date. The Unbundling LDT is expected to be on Tuesday, 27 June 2023.
9. If the general meeting is adjourned or postponed, the above dates and times will change, but the
forms of proxy submitted for the initial general meeting will remain valid in respect of any
adjournment or postponement of the general meeting.
10. Although the salient dates and times are stated to be subject to change, such statement shall not
be regarded as consent or dispensation for any change to time periods which may be required in
terms of the Companies Act, the Companies Regulations and the JSE Listings Requirements,
where applicable, and any such consents or dispensations must be specifically applied for and
granted.
11. All times referred to in this Circular are references to South African Standard Time.
6 FRACTIONAL ENTITLEMENTS, CASH PROCEEDS AND APPLICABLE RATE
6.1 Applying the distribution entitlement ratios in the Unbundling may result in fractional
entitlements for AEEI Shareholders to the Unbundled AYO Shares. In accordance with the
JSE Listings Requirements, such fractional entitlements will be rounded down to the nearest
whole number resulting in allocations of whole Unbundled AYO Shares and a cash payment
in respect of the fractional entitlements to AEEI Shareholders being credited to AEEI
Shareholders’ accounts held at their CSDP or broker.
6.2 AEEI Shareholders will accordingly be paid the cash proceeds (net of any applicable taxes
(such as securities transfer tax) or costs) of the sale of the fractional entitlements to the
Unbundled AYO Shares on the basis outlined below. In accordance with the JSE Listings
Requirements, this amount will be determined with reference to the volume weighted average
price in Rand of AYO Shares traded on the JSE on Wednesday, 28 June 2023, being the first
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trading day “ex” the entitlement to participate in the Unbundling, reduced by 10% ("Cash
Proceeds").
6.3 AEEI has set aside the necessary funds to pay the Cash Proceeds and has made the required
application for dispensation under section 119(6) of the Companies Act to be exempted from
regulations 111(4) and 115(5) of the Companies Regulations.
6.4 The Cash Proceeds will be paid: (i) by AEEI to the relevant registered certificated AEEI
Shareholders; and (ii) by a nominee or CSDP to the relevant AEEI Shareholders that hold
their AEEI Shares in uncertificated form within a nominee account or within a CSDP.
6.5 The actual price used to calculate the Cash Proceeds will be announced by AEEI on SENS
on Thursday, 29 June 2023.
7 PRO FORMA FINANCIAL EFFECTS OF THE UNBUNDLING
7.1 The summarised pro forma financial effects (“pro forma financial effects”) of the Unbundling
are the responsibility of the Board, have not been reviewed or audited by AEEI’s external
auditors, Crowe JHB and Thawt Inc, and have been prepared for illustrative purposes only to
provide information about how the Unbundling may have affected AEEI’s year end results
and financial position for the 12 months ended 30 August 2022 and, because of its nature,
may not give a fair presentation of the AEEI financial position, changes in equity, results of
operations or cash flows after the Unbundling nor the effect of the Unbundling on AEEI's
results of operations.
7.2 The pro forma financial effects have been prepared in a manner consistent in all respects
with International Financial Reporting Standards, the accounting policies adopted by AEEI
as at 30 August 2022, the SAICA Guide on Pro Forma Financial Information and the JSE
Listings Requirements.
7.3 The table below sets out the pro forma financial effects of the Unbundling on AEEI as at
31 August 2022 and the assumptions used in the preparation thereof.
Audited Group
to 31 August AEEI Group
2022 before the after the %
Unbundling Unbundling Change
R'000 R'000
Loss before tax (330 829) (1 183 292) -258%1
Normalised (losses) / profit before
tax reconciliation (152 853) 88 716 158%2
Basic earnings per share (cents) (45,78) (237,06) -418%3
Headline (loss)/profit (182 452) 100 155 155%4
Headline (loss)/profit per share
(cents) (37,16) 20,40 155%5
Normalised headline(loss)/profit (12 560) 107 911 959%6
Normalised headline (loss)/profit per
share (cents) (2,56) 21,98 959%7
Net asset value per share (cents) 993,32 398,87 -60%8
Total assets 6 029 757 2 283 790 -62%9
Number of ordinary shares in issue
at period end ('000) 491 022 491 022
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Weighted average number of
shares at period end ('000) 491 022 491 022
Notes:
1. The disposal of the AYO subsidiary will result in a loss on disposal of R1.9 billion. This loss, when
taken into account, results in an increase in losses before tax.
2. The effects of the Unbundling, excluding the accounting loss of the disposal of the AYO subsidiary,
will see the Group generating net profit before tax compared to the loss incurred before the
Unbundling
3. Basic losses per share increase to a loss per share of 237.06 cents from a loss of 45.78 cents per
share. The loss was due to the accounting effect of the loss on disposal, from the unbundling of
the AYO subsidiary.
4. The Unbundling will see the Group generating a headline profit of R100 million, an improvement
from the current headline loss of R182 million as the Group will have lower impairment losses.
5. The Unbundling has a positive impact on headline profits as the Group will be able to generate a
headline profit per share of 20.40 cents, an improvement from the current headline loss per share
of 37.16 cents due to the increase in net profit and lower impairment expenses.
6. The improvement in normalised earnings reflects the effects of the Unbundling after adjusting for
the loss on the disposal of AYO. The Group will be able to generate profits because of the reduction
in operating expenditure.
7. Normalised earnings per share after the Unbundling reflects a profit per share of 21.98 cents, an
improvement from the current loss per share of 2.56 cents. This is due to a decrease in operating
expenditure in the continuing operations of the Group after the Unbundling.
8. The net asset value per share of the Group will decrease by 60% as a result of the Unbundling, as
the Group's investments have not been spared from the negative impact that the COVID-19
pandemic has had all global markets. After the Unbundling, the investments of the Group remain
impaired to reflect the prevailing reality of the global economic recession. A reduction in cash
balances contributes to the decrease in net asset value after the Unbundling, a position which the
Board is taking measures to improve.
9. The total assets of the Group will decrease by 62% as a result of the Unbundling. Despite this
effect, the assets of the Group will be in excess of the liabilities of the Group. The working capital
of the Group will also be adequate for ordinary business purposes for a period of 12 months. The
Group will be able, in the ordinary course of business, to pay its debts for a period of 12 months
after the Unbundling.
8 EXCHANGE CONTROL REGULATION
8.1 Summary
8.1.1 This summary is based on the laws in force and applied in practice as at the date of this
announcement and is subject to changes to those laws and practices subsequent to such
date.
8.1.2 The following summary does not constitute advice, is intended as a guide only and is not a
comprehensive statement of the applicable exchange control regulations as read with the
Currency and Exchanges Manual for Authorised Dealers (“AD Manual”). AEEI Shareholders
who have any queries regarding exchange control related matters should contact their own
professional advisers without delay. The Unbundled AYO Shares are not freely transferable
from the Common Monetary Area (defined below) and must be dealt with in terms of the
South African Exchange Control Regulations, 1961, as amended ("Exchange Control
Regulations") as read with the AD Manual (together, the “Excon Rules”).
8.1.3 The concept of “emigration” as recognised by the Financial Surveillance Department of the
South African Reserve Bank (“SARB”) is being phased out with effect from 1 March 2021
and is replaced by a verification process. Exchange Control Circular 6/2021 dated
26 February 2021 and Circular 8/2021 dated 21 May 2021 set out the changes in relation to
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emigrants and changes to the AD Manual with effect from 1 March 2021. Until 28 February
2021, the Excon Rules distinguished between residents, non-residents and emigrants. As of
1 March 2021, under the new framework, natural person residents and natural person
emigrants are treated identically. To ensure a smooth transition from the old framework to
the new framework, natural persons who applied to be emigrants under the old framework,
by obtaining a MP336(b) form that was attested by an authorised dealer on or before 28
February 2021, will be dealt with in terms of the exchange control procedures relating to
emigration for exchange control purposes prior to 1 March 2021 provided their emigration
applications were approved on or before 28 February 2021. For the purposes of the Excon
Rules:
- a resident means any person, being a natural person or a legal entity, who has taken up
permanent residence, is domiciled or registered in South Africa;
- a non-resident is a person, being a natural person or a legal entity, whose normal place
of residence, domicile or registration is outside the Common Monetary Area, consisting
of South Africa, Namibia and the Kingdoms of Lesotho and eSwatini (“Common
Monetary Area” or “CMA”); and
- an emigrant means a South African resident who has left South Africa to take up
permanent residence or has been granted permanent residence in any country outside
of the CMA. For purposes of the Excon Rules, a South African resident will only be
regarded as an emigrant if they placed their emigration on record with the SARB under
the exchange control policy which applied up to 28 February 2021.
8.1.4 AEEI Shareholders who are uncertain as to whether they are residents or non-residents or
South African non-tax residents (emigrants) for purposes of the Excon Rules, are advised to
approach their relevant Authorised Dealer to request confirmation.
8.2 Emigrants from the CMA
8.2.1 Any share certificates that may be issued by AYO in respect of the Unbundled AYO Shares
to emigrants from the CMA will be endorsed "non-resident" in accordance with the Excon
Rules.
8.2.2 Uncertificated Unbundled AYO Shares will be credited directly to an AEEI Shareholder’s
emigrant share accounts at the CSDP or broker controlling its remaining portfolios and an
appropriate electronic entry will be made in the relevant register reflecting a “non-resident”
endorsement. The CSDP or broker will ensure that the emigrant adheres to the Excon Rules.
8.2.3 Any Unbundled AYO Shares issued in certificated form and Cash Proceeds based on an
emigrants’ Unbundled AYO Shares controlled in terms of the Excon Rules will be forwarded
to the authorised dealer in foreign exchange controlling their remaining assets.
8.3 Residents outside of the CMA
8.3.1 Any share certificates that may be issued by AYO in respect of the Unbundled AYO Shares
to non-residents of the CMA will be endorsed "non-resident" in accordance with the Excon
Rules.
8.3.2 Uncertificated Unbundled AYO Shares will be credited directly to an AEEI Shareholder’s non-
resident share account at the CSDP or broker controlling their portfolios and an appropriate
electronic entry will be made in the relevant register reflecting a "non-resident" endorsement.
The CSDP or broker will ensure that the non-resident adheres to the Excon Rules.
8.3.3 Cash Proceeds due to non-residents are freely transferable from South Africa, subject to
being converted into a currency other than Rand or paid for the credit of a non-resident Rand
account.
9 TAXATION
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9.1 This summary is a general and non-exhaustive commentary on certain South African tax
consequences of the Unbundling and is intended to be used only as a general guide and
does not constitute legal or tax advice nor is it intended to constitute a complete analysis of
the tax consequences of the Unbundling. AEEI and its advisers cannot be held responsible
for the taxation consequences of the Unbundling, and therefore, it is recommended that in
order for an AEEI Shareholder to obtain certainty on their tax position, they should consult an
independent professional adviser immediately.
9.2 Certain South Africa tax considerations for AEEI and the AEEI Shareholders
The Unbundling will constitute a disposal by AEEI of all of the Unbundled AYO Shares to the
AEEI Shareholders. It is expected that the disposal should qualify as an "unbundling
transaction" as contemplated in section 46 of the Income Tax Act, which, subject to the
considerations set out below, allows for a tax neutral implementation of the Unbundling from
an income tax, capital gains tax (“CGT”), dividends tax and securities transfer tax (“STT”)
perspective for certain AEEI Shareholders. A more detailed explanation of the application of
section 46 of the Income Tax Act and some important considerations for AEEI Shareholders
are set out below:
9.3 Disposal of the Unbundled AYO Shares
9.3.1 AEEI holds the Unbundled AYO Shares as capital assets.
9.3.2 Subject to the application of section 46(7) of the Income Tax Act, the distribution of the
Unbundled AYO Shares by AEEI, in terms of the Unbundling, will be disregarded by AEEI in
determining its taxable income or assessed loss in the tax year that the Unbundling takes
place.
9.3.3 If AEEI distributes the Unbundled AYO Shares to AEEI Shareholders who constitute
"disqualified persons" as contemplated in section 46(7) of the Income Tax Act, the
Unbundling may attract tax (CGT) in the following instance:
9.3.3.1 where such AEEI Shareholder(s) holds in excess of 5% of the AEEI Shares; and
9.3.3.2 the market value of the Unbundled AYO Shares exceed the tax cost / expenditure
thereof.
For this purpose, a "disqualified person" is defined to mean:
9.3.3.3 a person that is non-resident in South Africa;
9.3.3.4 the government of the Republic in the national, provincial or local sphere, contemplated
in section 10(1)(a) of the Income Tax Act;
9.3.3.5 a public benefit organisation as defined and approved in terms of section 30 of the
Income Tax Act;
9.3.3.6 a recreational club as defined and approved in terms of section 30A of the Income Tax
Act;
9.3.3.7 a company or trust contemplated in section 37A of the Income Tax Act;
9.3.3.8 a fund contemplated in section 10(1)(d)(i) of (ii) of the Income Tax Act; or
9.3.3.9 a person contemplated in section 10(1)(cA) or (t) of the Income Tax Act.
9.4 AEEI's expenditure in respect of the Unbundled AYO Shares is as follows:
an average cost per share of R0.46 per Unbundled AYO Share.
9.5 Consequently, if:
9.5.1 an AEEI Shareholder holds in excess of 5% of the AEEI Shares and is considered a
"disqualified person"; and
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9.5.2 the market value of the Unbundled AYO Shares, at the end of the day after the last day to
trade, exceeds the expenditure set out in paragraph 9.4 above,
then AEEI will realise a capital gain on the difference between the market value of the
Unbundled AYO Shares and such expenditure.
9.6 AEEI Shares held as trading stock
9.6.1 Any AEEI Shareholder holding AEEI Shares as trading stock will be deemed to acquire the
Unbundled AYO Shares as trading stock.
9.6.2 The AEEI Shareholder must allocate a portion of the expenditure in respect of, and the market
value of, the AEEI Shares to the Unbundled AYO Shares and reduce the expenditure in
respect of and the market value of the AEEI Shares.
9.6.3 The expenditure to be allocated to the Unbundled AYO Shares will be determined by applying
the ratio that the market value of Unbundled AYO Shares as at the end of the day after the
last day to trade, bears to the sum of the market value, at the end of that day, of the AEEI
Shares and the Unbundled AYO Shares.
9.6.4 This allocation of expenditure to the Unbundled AYO Shares will reduce the expenditure of
the AEEI Shares held, thus allocating the expenditure between the AEEI Shares and the
Unbundled AYO Shares.
9.7 AEEI Shares held as capital assets
9.7.1 Any AEEI Shareholder holding AEEI Shares as capital assets will be deemed to acquire the
Unbundled AYO Shares as capital assets.
9.7.2 The AEEI Shareholder must allocate a portion of the expenditure in respect of and the market
value of the AEEI Shares to the Unbundled AYO Shares and reduce the expenditure in
respect of, and the market value of, the AEEI Shares.
9.7.3 The expenditure to be allocated to the Unbundled AYO Shares will be determined by applying
the ratio that the market value of Unbundled AYO Shares as at the end of the day after the
last day to trade, bears to the sum of the market value, at the end of that day, of the AEEI
Shares and the Unbundled AYO Shares.
9.7.4 The expenditure (and CGT valuation, where applicable) so allocated to the Unbundled AYO
Shares will reduce the expenditure (and CGT valuation, where applicable) of the AEEI Shares
held, thus allocating this cost history between the AEEI Shares and the Unbundled AYO
Shares.
9.7.5 AEEI Shareholders will be deemed to have acquired the Unbundled AYO Shares on the date
on which the AEEI Shares were originally acquired.
9.8 Dividends tax and returns of capital
In terms of sections 46(5) and 46(5A) of the Income Tax Act, the distribution of the Unbundled
AYO Shares must be disregarded in determining liability for dividends tax and must not be
treated as a return of capital for the purposes of paragraph 76B of the Eighth Schedule to the
Income Tax Act. To the extent that section 46(7) of the Income Tax Act (see paragraph 9.3
above) is applicable, the normal dividends tax rules will be applicable to determine if AEEI or
the disqualified person will be subject to dividends tax. If AEEI is subject to dividends tax, the
amount of the tax payable must also be added to the expenditure to be allocated as between
the AEEI Shares and the Unbundled AYO Share.
9.9 Securities transfer tax
The distribution of the Unbundled AYO Shares to all AEEI Shareholders will be exempt from
the payment of any STT.
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9.10 Cost apportionment announcement
AEEI will advise the AEEI Shareholders, by way of an announcement to be released on SENS
on or about Thursday, 29 June 2023, of the expenditure to be added to their Unbundled AYO
Shares. The allocated expenditure must be used in the determination of any profits or losses
derived on any future disposals of the Unbundled AYO Shares or AEEI Shares.
9.11 Disqualified person shareholder(s)
The tax consequences outlined in paragraphs 9.2 and 9.3 above, may apply differently in
respect of any AEEI Shareholder who is considered a "disqualified person" for purposes of
section 46(7) of the Income Tax Act.
9.12 Non-resident shareholders
Shareholders who are non-resident for tax purposes in South Africa are advised to consult
their own professional tax adviser regarding the tax treatment of the Unbundling in their
respective jurisdictions, having regard to the tax laws in their jurisdiction and any applicable
tax treaties between South Africa and their country of residence.
9.13 Finalisation of the Unbundling may create a tax liability for AEEI Shareholders in
certain jurisdictions or give rise to other unanticipated tax consequences
Tax law and practice can be subject to differing interpretations and, in some jurisdictions, the
tax authorities are entitled to exercise discretion in how the tax law should be applied in
certain cases. Consequently, AEEI is not able to guarantee that the tax authorities in each
jurisdiction in which AEEI Shareholders may be subject to tax will interpret or apply the
relevant tax law and practice in a favourable way and this may give rise to adverse
consequences.
10 OVERSEAS AEEI SHAREHOLDERS
10.1 The following summary describes the restrictions applicable to AEEI Shareholders pursuant
to the Unbundling who have registered addresses outside of South Africa, who are nationals,
citizens or residents of countries other than South Africa ("Overseas AEEI Shareholders"),
or who are persons (including, without limitation, custodians, nominees and trustees) who
have a contractual or legal obligation to forward this announcement to a jurisdiction outside
South Africa or who hold AEEI shares for the account or benefit of any such Overseas AEEI.
10.2 The Unbundling will be implemented as a pro rata distribution in specie for no consideration
to all AEEI Shareholders recorded as such in the register of AEEI on the Record Date.
10.3 It is the responsibility of any Overseas AEEI Shareholder (including, without limitation,
nominees, agents and trustees for such persons) being notified by this announcement of the
Unbundling and wishing to take up their entitlement to the Unbundled AYO Shares to satisfy
themselves as to the full observance of the applicable laws of any relevant territory, including
obtaining any requisite governmental or other consents, observing any other requisite law,
requirements or formalities and paying any issue, transfer or other taxes due in such
territories.
10.4 Accordingly, persons (including, without limitation, nominees, agents and trustees) being
notified in terms of this announcement should not distribute or send the announcement to
any person in, or citizen or resident of, or otherwise into any jurisdiction where to do so would
or might contravene applicable law or regulation, including local securities laws or
regulations. Any person who distributes this announcement into any such territory (whether
under a contractual or legal obligation or otherwise) should draw the recipient’s attention to
the contents of this paragraph. Overseas AEEI Shareholders are obliged to observe the
applicable legal requirements of their relevant jurisdictions.
10.5 No action has been taken by AEEI to obtain any approval, authorisation or exemption to
permit the distribution of the Unbundled AYO Shares or the possession or distribution of this
announcement in any jurisdiction other than South Africa.
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10.6 The distribution of the Unbundled AYO Shares to Overseas AEEI Shareholders in terms of
the Unbundling may be affected by the laws of such Overseas AEEI Shareholders’ relevant
jurisdiction. Overseas AEEI Shareholders should consult their professional advisers as to
whether they require any governmental or other consent or need to observe any other
formalities to enable them to take up their entitlements with respect to the Unbundled AYO
Shares.
10.7 AEEI reserves the right, but shall not be obliged, to treat as invalid any transfer of Unbundled
AYO Shares in terms of the Unbundling, which appears to AEEI or its agents to have been
executed, effected or dispatched in a manner which may involve a breach of the securities
laws or regulations of any jurisdiction; or if AEEI believes (in its discretion) or its agents
believe, that the same may violate applicable legal or regulatory requirements; or if AEEI
believes (in its discretion) that it is prohibited or unduly onerous or impractical to transfer the
AYO Shares to such Overseas AEEI Shareholder in terms of the Unbundling.
10.8 If an Overseas AEEI Shareholder is of the view that the transfer of the Unbundled AYO
Shares in terms of the Unbundling to such Overseas AEEI Shareholder may involve a breach
of the securities laws or regulations or violate applicable legal or regulatory requirements,
such Overseas AEEI Shareholder must as soon as reasonably practicable notify their CSDP
or broker of such fact or circumstance.
10.9 AEEI shall be entitled (in its discretion), including in either of the aforementioned instances,
to do all things necessary or desirable to ensure compliance with applicable law and/or
regulation including selling the Unbundled AYO Shares that would otherwise have been
transferred to the Overseas AEEI Shareholder under the Unbundling on behalf of the
Overseas AEEI Shareholder and at their risk, with the net proceeds of such sale (after
deduction of any applicable taxes which may in this instance include STT, withholdings or
costs) to be paid to the Overseas AEEI Shareholder. In this regard, the Unbundled AYO
Shares may be aggregated and disposed of on the JSE in an orderly manner by the AEEI
Transfer Secretaries on behalf of and for the benefit of such Overseas AEEI Shareholders
as soon as is reasonably practical after the implementation of the Unbundling at the best
price that can reasonably be obtained at the time of sale.
Please refer to the important disclaimers at the end of this announcement for additional
information that may be applicable to certain Overseas AEEI Shareholders.
11 FURTHER INFORMATION REGARDING AEEI AND AYO
To access further information regarding AEEI and AYO, AEEI Shareholders are referred to
the following documents, which are incorporated by reference, into, and form part of, this
announcement:
11.1 AEEI
Reference document Information incorporated by reference
into this announcement
AEEI’s integrated report for the financial All information in the reference document
year ended 31 August 2022
AEEI’s unaudited interim results for the six All information in the reference document
months ended 28 February 2022
AEEI’s integrated report for the financial All information in the reference document
year ended 31 August 2021
AEEI’s unaudited interim results for the six All information in the reference document
months ended 28 February 2021
AEEI’s integrated report for the financial All information in the reference document
year ended 31 August 2020
12
Please note that electronic copies of all the above documents are available on AEEI’s website
at https://aeei.co.za.
11.2 AYO
Reference document Information incorporated by reference
into this announcement
AYO’s integrated report for the financial All information in the reference document
year ended 31 August 2022
AYO’s unaudited interim results for the six All information in the reference document
months ended 28 February 2022
AYO’s integrated report for the financial All information in the reference document
year ended 31 August 2021
AYO’s unaudited interim results for the six All information in the reference document
months ended 28 February 2021
AYO’s integrated report for the financial All information in the reference document
year ended 31 August 2020
Please note that electronic copies of all the above documents are available on AYO’s website
at https://ayotsl.com/.
12 WITHDRAWAL OF CAUTIONARY
AEEI Shareholders are advised that, as a result of the publication of this announcement, the
cautionary announcement relating to the Unbundling has been withdrawn and caution is no
longer required to be exercised by AEEI Shareholders in respect thereof when dealing in their
AEEI Shares.
13 INDEPENDENT BOARD RESPONSIBIITY STATEMENT
The Independent Board accepts responsibility for the information contained in this
announcement insofar as it relates to details in respect of AEEI and the Unbundling. To the
best of the Independent Board’s knowledge and belief, such information is true and this
announcement does not omit anything likely to affect the importance of such information.
Cape Town
6 March 2023
Transaction adviser and Sponsor
Vunani Capital Sponsors
Joint Sponsor
Merchantec Capital
Legal adviser
Clyde & Co Incorporated
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Disclaimers
Subject to any applicable law or regulations, AEEI Shareholders should note that in the event that any
difficulty arises in connection with the Unbundling, AEEI may settle that difficulty as it, in its sole
discretion, deems expedient.
The release, publication or distribution of this announcement in jurisdictions other than South Africa
may be restricted by law and therefore persons into whose possession this announcement may come
should inform themselves about, and observe, any such applicable restrictions or requirements. Any
failure to comply with such restrictions or requirements may constitute a violation of the securities laws
and regulations of any such jurisdiction. To the fullest extent permitted by applicable law, the Company
disclaims any responsibility or liability for the violation of any restrictions or requirements by any person.
This announcement is for information purposes only and is not, and should not be construed as to
constitute, an offer to sell or the solicitation of an offer to buy securities and neither this document nor
anything herein nor any copy thereof may be taken into or distributed, directly or indirectly, in or into
any jurisdiction in which to do so would be prohibited by applicable law. In South Africa, the information
contained in this announcement does not constitute or form a part of any offer to the public for the sale
of, or subscription for, or an invitation, advertisement or the solicitation of an offer to purchase and/or
subscribe for, securities as defined in and/or contemplated by the Companies Act. Accordingly, this
announcement does not, nor does it intend to, constitute a "registered prospectus" or an advertisement
relating to an offer to the public, as contemplated by the Companies Act and no prospectus has been,
or will be, filed with the South African Companies and Intellectual Property Commission in respect of
this announcement.
Notice to US AEEI Shareholders
This announcement is not an offer of any securities for sale in the United States. The Unbundled AYO
Shares have not been and will not be registered under the US Securities Act of 1933 (US Securities
Act), or with any securities regulatory authority of any state or other jurisdiction in the United States and
may not be offered, sold, exercised, transferred or delivered, directly or indirectly, in or into the United
States at any time except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the US Securities Act and applicable state and other securities laws of the
United States.
The Unbundled AYO Shares are expected to be distributed to AEEI Shareholders by way of an
unbundling constituting a transaction meeting the conditions of Staff Legal Bulletin No. 4 of the staff of
the US Securities and Exchange Commission for “spin-off” transactions. All Overseas AEEI
Shareholders located in the US are therefore eligible to receive the Unbundled AYO Shares.
The Unbundled AYO Shares have not been and will not be listed on a US securities exchange or quoted
on any inter-dealer quotation system in the United States. Neither AEEI nor AYO intends to take any
action to facilitate a market in the Unbundled AYO Shares in the United States. Consequently, it is
unlikely that an active trading market in the United States will develop for the Unbundled AYO Shares.
The Unbundled AYO Shares have not been approved or disapproved by the United States Securities
and Exchange Commission, any state securities commission in the United States or any other
regulatory authority in the United States, nor have any of the foregoing authorities passed comment
upon, or endorsed the merit of, the Unbundling or the accuracy or the adequacy of this announcement.
Any representation to the contrary is a criminal offence in the United States. AEEI Shareholders with a
registered address in the United States should consult their own legal and tax advisers with respect to
the legal and tax consequences of the Unbundling in their particular circumstances.
Notice to AEEI Shareholders located in Canada
This announcement does not constitute an offer for the sale or distribution of any Unbundled AYO
Shares in Canada. All AEEI Shareholders located in Canada will not receive any Unbundled AYO
Shares and will be dealt on the basis outlined in paragraph 8 above.
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Notice to AEEI Shareholders in the European Economic Area (EEA) and the UK
This announcement is not a prospectus, as such term is defined in the Prospectus Regulation (EU)
2017/1129, on the basis that the Unbundled AYO Shares are not being admitted to trading on a
regulated market situated or operating within the EEA or the UK. Accordingly, any person making or
intending to make any offer for Unbundled AYO Shares should do so in circumstances in which no
obligation arises for AEEI or AYO to produce a prospectus for such offer. None of AEEI or AYO has
authorised the making of any offer of Unbundled AYO Shares through any financial intermediary.
Notice to AEEI Shareholders located in Australia
The Unbundling is not regulated by the fundraising provisions of the Australian Corporations Act of 2001
(Cth). Accordingly, this announcement is not a prospectus and has not been lodged with or reviewed
by the Australian Securities and Investments commission.
The Unbundled AYO Shares have not been and will not be quoted on ASX Limited or any other
Australian securities exchange. None of AEEI, or AYO intends to take any action to facilitate a market
in the Unbundled AYO Shares in Australia. Consequently, it is unlikely that an active trading market in
Australia will develop for the Unbundled AYO Shares.
Notice to AEEI Shareholders located in Japan
This announcement does not and will not constitute or form part of, or be construed as, an offer,
invitation or recommendation to purchase, sell or subscribe for any securities in Japan or solicitation of
any offer to purchase, sell or subscribe for any securities in Japan. The Unbundled AYO Shares have
not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law
No. 25 of 1948 of Japan, as amended).
Notice to AEEI Shareholders in Switzerland
No Unbundled AYO Shares may be offered, sold or advertised directly or indirectly into or in Switzerland
except in a manner that will not result in a public offering within the meaning of Article 652a or 1156 of
the Swiss Code of Obligations. This announcement has not been prepared with regard to the disclosure
standards for prospectuses under Article 652a or 1156 of the Swiss Code of Obligations, the listing
rules of SIX Swiss Exchange or similar rules of other Swiss trading venues, and therefore does not
constitute a prospectus within the meaning of Article 652a or 1156 of the Swiss Code of Obligations,
the listing rules of SIX Swiss Exchange or similar rules of other Swiss trading venues. This
announcement may not be distributed, published or otherwise made available in Switzerland except in
a manner that will not constitute a public offering of the Unbundled AYO Shares.
Notice to AEEI Shareholders in South Korea
The Unbundled AYO Shares have not been, and will not be, registered under the Financial Investment
Services and Capital Markets Act of South Korea and the regulations thereunder (FISCMA).
Accordingly, the Unbundled AYO Shares may not be offered, sold, delivered or transferred, directly or
indirectly, in South Korea or to, or for the account or benefit of, any resident of South Korea (as defined
in FISCMA) except as otherwise permitted under applicable South Korean laws and regulations.
Notice to AEEI Shareholders in the People's Republic of China (PRC)
This announcement does not constitute a public offer of Unbundled AYO Shares, whether by way of
sale or subscription, in the PRC. Except to the extent consistent with applicable laws and regulations in
the PRC. The Unbundled AYO Shares are not being offered and may not be offered or sold, directly or
indirectly, in the PRC to or for the benefit of, legal or natural persons of the PRC. According to the laws
and regulations in the PRC, with the exception to the extent consistent with applicable regulations in
the PRC, Unbundled AYO Shares may, subject to the laws and regulations of the relevant jurisdictions,
only be offered or sold to non-PRC natural or legal persons in any jurisdiction other than the PRC.
General
The information contained in this announcement constitutes factual information as contemplated in
Section 1(3)(a) of the Financial Advisory and Intermediary Services Act, No. 37 of 2002, as amended
15
(FAIS Act) and should not be construed as an express or implied recommendation, guide or proposal
that any particular transaction in respect of the AEEI Shares or in relation to the business or future
investments of AEEI, is appropriate to the particular investment objectives, financial situations or needs
of a prospective investor, and nothing contained in this announcement should be construed as
constituting the canvassing for, or marketing or advertising of, financial services in South Africa. AEEI
is not a financial services provider licensed as such under the FAIS Act.
Forward-looking statements
This announcement contains statements about AEEI and the AEEI group of companies (“the Group”)
that are, or may be, forward-looking statements. All statements (other than statements of historical fact)
are, or may be deemed to be, forward-looking statements, including, without limitation, those
concerning: strategy; the economic outlook for the industries in which AEEI and the Group operates or
invests as well as markets generally; production; cash costs and other operating results; growth
prospects and outlook for operations and/or investments, individually or in the aggregate; liquidity,
capital resources and expenditure, statements in relation to the Unbundling, its implementation and the
benefits of the Unbundling. These forward-looking statements are not based on historical facts, but
rather reflect current expectations concerning future results and events and generally may be identified
by the use of forward-looking words or phrases such as "believe", "aim", "expect", "anticipate", "intend",
"foresee", "forecast", "likely", "should", "planned", "may", "estimated", "potential" or similar words and
phrases. Examples of forward-looking statements include statements regarding a future financial
position.
By their nature, forward-looking statements involve known and unknown risks and uncertainties
because they relate to events and depend on circumstances that may or may not occur in the future.
The Company cautions that forward-looking statements are not guarantees of future performance.
Actual results, financial and operating conditions, returns and the developments within the industries
and markets in which the Company and/or the Group operates and/or invests may differ materially from
those made in, or suggested by, the forward-looking statements contained in this announcement. All
these forward-looking statements are based on estimates, predictions and assumptions, as regards the
Company and the Group, all of which estimates, predictions and assumptions, although the Company
believes them to be reasonable, are inherently uncertain and may not eventuate or eventuate in the
manner the Company expects. Factors which may cause the actual results, performance or
achievements to be materially different from any future results, performance or achievements
expressed or implied in those statements or assumptions include matters not yet known to the Company
or not currently considered material by the Company.
Investors should keep in mind that any forward-looking statement made in this announcement or
elsewhere is applicable only at the date on which such forward-looking statement is made. New factors
that could cause the business of the Company and the Group not to develop as expected may emerge
from time to time and it is not possible to predict all of them. Further, the extent to which any factor or
combination of factors may cause actual results, performance, or achievement to differ materially from
those contained in any forward-looking statement is not known. The Company has no duty to, and does
not intend to, update, or revise the forward-looking statements contained in this announcement or any
other information herein, except as may be required by law. Any forward-looking statement has not
been reviewed nor reported on by the Company's external auditor or any other expert.
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