QUALITY BEVERAGES LIMITED
VITAL WATER BOTTLING CO. LTD
FURTHER ADMISSION DOCUMENT
In respect of the further issue and admission of up to 15,372,756new ordinary shares of MUR 10 each of QBL on the Development & Enterprise Market (‘DEM’) following the Amalgamation.
The Further Admission Document includes information given in compliance with the DEM Rules governing the further admission of newly issued ordinary shares of QBL on the DEM which shall be allotted to the shareholders of VITAL should the Amalgamation be approved. It also includes an overview of the activities and the financial statements of QBL.
AND
AMALGAMATION PROPOSAL
In respect of the proposed amalgamation (the ‘Amalgamation’) ofVital Water Bottling Co. Ltd (‘VITAL’) with and intoQuality Beverages Limited (‘QBL’)
This Amalgamation Proposal, which conforms to the provisions of sections 244 to 246 and 248 of the Companies Act 2001, has been prepared in the context of the Amalgamation. It contains all the details required by section 245(1) of the Companies Act 2001 and contains or refers to certain other information required to be sent to the shareholders of QBL and VITAL under section 246 of the Companies Act 2001. A copy of this Amalgamation Proposal will be filed with the Registrar of Companies together with the certificates required by the Companies Act 2001.
07 October 2015
AD Number: LEC/C/01/2015
IF YOU ARE A SHAREHOLDER OF EITHER QBL OR VITAL, THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR
IMMEDIATE ATTENTION
For a full appreciation of this Document, it should be read in its entirety. You are encouraged to discuss the contents of this Document with your investment dealer, your legal adviser or any other independent professional adviser and, if in doubt about the action you should take, you should consult any one or more of them immediately.
This Document is neither an invitation nor a prospectus nor a statement in lieu of a prospectus for the public in Mauritius or elsewhere to subscribe for shares in QBL.
This Document is intended only for the use of the person to whom it is addressed and is not to be redistributed, reproduced or used, in whole or in part, for any other purpose.
DISCLAIMER
Neither the Listing Executive Committee (‘LEC’) of the Stock Exchange of Mauritius Ltd (‘SEM’), nor the SEM and nor the Financial Services Commission (‘FSC’) assumes any responsibility for the contents of this Document. The LEC,the SEM and the FSC make no representation as to the accuracy or completeness of any of the statements made or opinions expressed in this Document and expressly disclaim any liability whatsoever for any loss arising from or in reliance upon the whole or any part thereof.
Contents
1DECLARATION BY DIRECTORS
2DEFINITIONS
3FURTHER ADMISSION DOCUMENT AND AMALGAMATION PROPOSAL
3.1Context
3.2The Amalgamated and Amalgamating Companies
3.3Details of the Amalgamation
3.4Calendar of Events
3.5Rationale Behind the Amalgamation
3.6Particulars of the Terms of the Amalgamation
3.6.1Exchange of Shares
3.6.2Share Exchange Ratio
3.6.3Number of shares to be issued by the Amalgamated Company to VITAL shareholders
3.6.4Share Capital
3.7Procedures for the Exchange of Shares
3.8Statement setting out the Rights of Shareholders under Section 108 of the Companies Act 2001
3.9Approval of the Listing Executive Committee (‘LEC’)
4CORPORATE INFORMATION
4.1Quality Beverages Limited
4.1.1Company background and principal activities
4.1.2Organisational Structure
4.2Vital Water Bottling Co. Ltd
4.2.1Company background and principal activities
4.2.2Organisational Structure
4.3Information about the Amalgamated Company
4.4Corporate Information for QBL, VITAL and the Amalgamated Company
4.5Directors of the Amalgamated Company
4.6Third Party Information
4.7Financial Information
4.7.1Auditors’ Report
4.7.2Financial highlights
4.7.3Significant Change in the Financial or Trading Position of QBL and VITAL
4.7.4Proforma financial position of the Amalgamated Company as at 30 June 2015
5STATEMENT OF MATERIAL INTERESTS
5.1Statement of any material interests of the directors of QBL and VITAL in the Amalgamation, whether in that capacity or otherwise
5.2Statement of interests of any person, other than the directors who holds more than 5% of the Stated Capital of QBL and VITAL
6STATEMENT OF DIRECTORS OF QBL AND VITAL
7RISK FACTORS
7.1Business Risks
7.1.1Market risk
7.1.2Credit risk
7.1.3Liquidity risk
7.1.4Stock market risk
7.2Operational risks
7.3Regulatory risks
7.4Completion Risks
7.5Forward looking statements
8ADDITIONAL DISCLOSURES
8.1Remuneration and Benefits in Kind to Directors
8.2Estimated Costs
8.3Material Contracts
8.4Legal and Arbitration Proceedings
8.5Trademarks
8.6Subsequent Management and Operation of the Amalgamated Company
8.7Proposed Constitution
9COMPLETION OF AMALGAMATION
9.1Required Arrangements
9.1.1Special Resolution
9.1.2Notices
9.1.3Registration
10DOCUMENTS AVAILABLE FOR INSPECTION
APPENDIX IKEY PROVISIONS OF THE PROPOSED CONSTITUTION OF THE AMALGAMATED COMPANY
APPENDIX IICOPIES OF THE RESOLUTIONS TO BE ADOPTED AT THE SPECIAL MEETINGS OF THE SHAREHOLDERS OF QBL AND VITAL
APPENDIX IIICOPIES OF DIRECTORS’ CERTIFICATES UNDER SECTION 246(2) OF THE COMPANIES ACT 2001
APPENDIX IVSECTION 110 OF THE COMPANIES ACT 2001
APPENDIX VNOTICE OF SPECIAL MEETINGS TO SHAREHOLDERS OF QBL AND VITAL
APPENDIX VIPROXY FORM
APPENDIX VII OTHER DIRECTORSHIP
1DECLARATION BY DIRECTORS
The Directors, whose names appear under section 4.4 at page 19collectively and individually accept full responsibility for the accuracy and completeness of the information contained in this Document. They furthermore declare that, to the best of their knowledge and belief, and after having made reasonable enquiries, this Document complies, where applicable, with the DEM rules, the Companies Act 2001, the Securities Act 2005 and any applicable rules and regulations made thereunder.
The Directors of QBL and VITAL also declare that the proposed transaction is a related party transaction under DEM rule 13 as both companies are subsidiaries of Currimjee Industries Limited.
The Directors of QBL further state that:
(i)in their opinion, having made due and careful enquiry, the working capital available to QBL is sufficient for its present requirements, that is for at least twelve (12) months from the date of further admission of its new ordinary shares;
(ii)the mortgages and charges on the assets of QBL are as disclosed in the latest published financial statements;
(iii)the contingent liabilities or guarantees of QBL are as disclosed in the latest published financial statements;
(iv)QBL has no legal or arbitration proceedings during the previous twelve (12) months which may have, or have had in the recent past, significant effects on its financial position or profitability; and
(v)no significant change in its financial or trading position has occurred since the end of the latest published financial statements.
The Amalgamation is subject to the satisfaction or waiver of the following conditions precedent:
(i)the approval of the shareholders of QBL and VITAL respectively by way of special resolutions; and
(ii)the receipt ofcertain third party and regulatory approvals, a list of which is available for inspection at the registered offices of QBL and VITAL respectively.
There is no certainty that those conditions precedent will be satisfied or waived. QBL and VITAL will issue communiqués in relation to the status of those conditions precedent in due course.
1DECLARATION OF DIRECTORS (CONT’D)
It is noted that:
(i)pursuant to an agreement made by QBL with VITAL under section 109(2)(b) of the Companies Act 2001, the Board of Directors of QBL and VITAL have agreed that QBL as the surviving Amalgamated Company, will acquire the shares of the shareholders of VITAL who vote against the resolution approving the Amalgamation and exercise their rights to require VITAL to acquire these shares pursuant to sections 108 and the following of the Companies Act 2001 (the “VITAL Dissenting Shareholders”);
(ii)the Board of Directors of VITAL may also make an arrangement with some other person, under section 109(2)(b) of the Companies Act 2001, to purchase the VITAL shares belonging tothe VITAL Dissenting Shareholders;
(iii)QBL as the surviving Amalgamated Company,or some other personas arranged by QBL under section 109(2)(b) of the Companies Act 2001, shall also purchase the shares of QBL shareholders voting against the resolution approving the Amalgamation and exercising their rights to require QBL to acquire their sharespursuant to sections 108 and the following of the Companies Act 2001 (the “QBL Dissenting Shareholders”).
Attention is drawn to the fact that the Board of Directors of both QBL and VITAL have resolved to recommend to their respective shareholders not to proceed with the Amalgamation if:
(i)the aggregate liability of QBL to the QBL Dissenting Shareholders and the VITAL Dissenting Shareholders (together the “Dissenting Shareholders”)arising at law and pursuant to the above agreement with VITAL exceeds the budget of MUR 50 Million as established by the Board of Directors of QBL and VITAL for that purpose; and
(ii)the Board of Directors of QBL and VITAL are unable to arrange for one or more third parties to purchase the shares of the Dissenting Shareholders for any amount in excess of the budgeted MUR 50 Million.
Subject to the timely satisfaction or waiver of the conditions precedent, the Effective Date of the Amalgamation is expected to be on 31 December 2015. However, if the conditions precedent are still not met or waived by 17 December 2015 at latest, the Amalgamation will be terminated.
For and on behalf of the Board of Directors of QBL and VITAL
Mr Uday K Gujadhur / Mr Hassam A M VayidDirector / Director
2DEFINITIONS
In this Document, where the context permits, the abbreviations set out below bear the following meanings and paragraphs refer to paragraphs of this Document:
Amalgamated Company / The amalgamated company is described in paragraph 3.2Amalgamation / The proposed amalgamation of VITAL with and into QBL as described in this Document
Amalgamation Proposal / The parts of this Document prepared in accordance with sections 244 to 246 of the Companies Act 2001
Act / TheCompanies Act 2001
CDS / The Central Depository & Settlement Co Ltd
Completion / The completion of the Amalgamation on the Effective Date
DEM / The Development & Enterprise Market operated by the SEM
DEM rules / The rules for Development & Enterprise Market Companies asamended in June 2015
Dissenting Shareholder / A shareholder of QBL or VITAL, as the context requires, who at the special meetings of the shareholders of QBL or VITAL, as applicable, casts all the votes attached to the shares registered in his name and for which he is the beneficial owner against the approval of the Amalgamation
Document / The present Further Admission Document and Amalgamation Proposal
Effective Date / The effective date of the Amalgamation is defined in paragraph 3.1
FSC / The Financial Services Commission
Further Admission Document / The sections of this Document prepared in accordance with the DEM rules with respect to the issue of new QBL shares to holders of VITAL shares in consideration for the Amalgamation
MUR / Mauritian Rupee
SEM / The Stock Exchange of Mauritius Ltd as established under the (now repealed) Stock Exchange Act 1998 and presently governed by the Securities Act 2005
Share Exchange Ratio / Has the meaning set out in sub-paragraph 3.6.2
QBL / Quality Beverages Limited, a public company with limited liability, registered under the laws of Mauritius (File No C885 and BRC No. C06000885)
QBL Shares / Ordinary shares in the stated capital of QBL
VITAL / Vital Water Bottling Co. Ltd, a public company with limited liability, registered under the laws of Mauritius (File No C9884 and BRC No. C06009884)
VITAL Shares / Ordinary shares in the stated capital of VITAL
3further admission document and AMALGAMATION PROPOSAL
3.1Context
This Document, which conforms to the provisions of sections 244 to 246 and 248 of the Companies Act 2001 and the requirements of the DEM rules in relation to the admission of further securities, has been prepared in the context of the Amalgamation and the subsequent admission of the new ordinary shares of QBL on the DEM. It contains all the details required by section 245(1) of the Companies Act 2001 and Schedule Two of the DEM rules and contains or refers to certain other information required to be sent to the shareholders of QBL and VITAL under section 246 of the Companies Act 2001.
Subject to the timely satisfaction or waiver of the conditions precedent set out in the Declaration by Directors, the Effective Date of the Amalgamation is expected to be on the 31 December 2015.
3.2The Amalgamated and Amalgamating Companies
The Amalgamated Company (being the surviving company) will be Quality Beverages Limited (QBL). The registered office of the Amalgamated Company will remain at6, Sir William Newton Street, Port Louis, Mauritius. QBL’scompanyregistration number is C885 and its Business Registration No. C06000885.
The amalgamating company will be VITAL. The registered office of VITAL is 6, Sir William Newton Street, Port Louis, Mauritius. VITAL’s company registration number is C9884 and its Business Registration No. is C06009884.
3.3Details of the Amalgamation
When the Amalgamation takes effect:
(a)the Amalgamation shall be effective on the date shown on the certificate of amalgamation issued by the Registrar of Companies, which shall be the same date specified in the Amalgamation Proposal;
(b)QBL and VITAL will merge and the Amalgamated Company QBL will continue as the surviving entity;
(c)all property, rights, powers, privileges, liabilities and obligations of VITAL shall continue to be the property, rights, powers, privileges, liabilities and obligations of the Amalgamated Company QBL;
(d)VITAL will be removed from the register of the Registrar of Companies;
(e)VITAL will cease to exist as a separate legal entity and its admission will be cancelled from the DEM pursuant to rule 37 of the DEM rules;
(f)the Amalgamated Company QBL shall continue to be liable for all the liabilities and obligations of each of the amalgamating companies and any proceedings which may be pending by, or against, VITAL may be continued by, or against, the Amalgamated CompanyQBL;
3further admission document and AMALGAMATION PROPOSAL (cont’d)
3.3Details of the Amalgamation (Cont’d)
(g)any conviction, ruling, order, or judgment in favour of, or against, VITAL may be enforced by, or against, the Amalgamated CompanyQBL; and
(h)VITAL’s shareholders (other than those who do not vote in favour of the Amalgamation and who exercise their rights to require VITAL to acquire their shares) will receive QBL shares as provided herein and their VITAL shares will then be cancelled.
Should the Amalgamation be completed on the Effective Date: -
(a)the last date of dealings in VITAL shares on the DEM is expected to be 28 December 2015;
(b)the admission of VITAL will be cancelled from the DEM prior toor onthe Effective Date;
(c)dealings in QBL shares on the DEM are expected to be suspended between 29 December 2015 and 11January 2016 inclusively; and
(d)the new ordinary shares of the Amalgamated Company that shall be issued as part of the Amalgamation will be thereafter listed on the DEM. Dealings in the shares of the Amalgamated Company,whether existing or newly issued,are expected to commence on 12 January 2016.
3.4Calendar of Events
The table below shows the calendar for the Amalgamation:
Calendar for Amalgamation Procedure16 September 2015 / Meetings of the Boards of Directors of QBL and VITAL
29 October 2015* / Special Meetings of the shareholders of QBL and VITAL
28 December 2015 / Last trading session of VITALShares on the DEM
29 December 2015 / Suspension of trading ofVITALShares
30 December 2015 / Closure of QBL and VITAL share registry
31 December 2015 / Effective Date of the Amalgamation
6 January 2016 / Issue of new shares of the Amalgamated Company to VITAL shareholders
11 January 2016 / Subsequent admission of the new shares on the DEM
12January 2016 / First day of trading of the shares of the Amalgamated Company on the DEM
*Shareholders who vote against the Amalgamation have fourteen (14) days to request a buy-back of their shares
3further admission document and AMALGAMATION PROPOSAL (cont’d)
3.5Rationale Behind the Amalgamation
The decision to pool the resources of QBL and VITAL stems from the shared objective of enhancing the competitiveness of their existing operations in an increasingly liberalised environment, and of being in a stronger position to take advantage of new development opportunities.
This Amalgamation will give a significant added impetus not only to the operations in which the two companies have been traditionally engaged but also open the way to a number of new avenues both locally and in the region.
The Amalgamation is also in line with the market trends to achieve size, scale, integration and greater financial strength and flexibility and in the interest of maximising shareholder value. The Amalgamated Company is likely to achieve higher long-term financial returns than could be achieved by QBL and VITAL individually.
The Boards of QBL and VITAL further believe that the financial, managerial and technical resources, personnel capabilities, skills and expertise of QBL and VITAL pooled in the Amalgamated Company will lead to increased competitive strength, optimisation of resources, productivity gains and logistic advantages, thereby significantly contributing to future growth.
Accordingly, the Boards of QBL and VITAL believe that the Amalgamation will benefit the respective companies and their shareholders, inter-alia, as the Amalgamation will:
- enable QBL and VITAL to consolidate their business operations and provide significant impetus to their growth since both companies are engaged in similar areas of business;
- assist in streamlining the business operations, administration, management and organisation as well as better utilisation of various resources;
- result in improved shareholder value for both companies, both in terms of share price appreciation and dividend yield, by way of a linear shareholding structure, improved financial structure and cash flows, increased asset base and stronger consolidated revenue and profitability; and
- enable a focused business approach for the maximisation of benefits and for the purposes of synergies of business.
For all those reasons, the directors of QBL and VITAL are confident that the Amalgamation of their companies is in the better interest of all the stakeholders.
3further admission document and AMALGAMATION PROPOSAL (cont’d)
3.6Particulars of the Terms of the Amalgamation
3.6.1Exchange of Shares
In consideration for the Amalgamation, QBL will issue new ordinary shares of MUR 10 each to VITAL’s shareholders. VITAL’s shareholders whose name appear on the share register of VITAL on 31 December 2015, will receive seven (7)new ordinary shares of QBL for every one (1) VITAL share (the ‘Share Exchange Ratio’) registered in their name.
The directors of QBL and VITAL have determined the Share Exchange Ratio shall be seven (7) based on the volume weighted average of the share prices prevailing on DEM for the six months immediately preceding the 31 August 2015 and which they consider to be the fair value of the shares prior to the approval of the transaction, and shall make recommendations to their shareholders accordingly.
The directors of QBL and VITAL draw comfort for their opinion from an independent valuation report prepared by PricewaterhouseCoopers Ltd ('PwC'), a copy of which is available for inspection at the registered offices of QBL and VITAL respectively, which estimates that the fair market value of the shares of QBL and VITALon a minority, marketable basis are MUR 8.30 and MUR 59.44 respectively. PwC has adopted an income approach using the discounted cash flow methodology for determining the fair market value of the shares of QBL and VITAL as at 30 June 2015. On this basis, PwC estimates the Share Exchange Ratio between VITAL and QBL at 7:1 that is seven (7) shares in QBL for each VITAL share held.