ADC launches mandatory offer for BancABC shares

ADC launches mandatory offer for BancABC shares
Published: 13 December 2013
African Development Corporation (ADC) has launched a mandatory offer for all outstanding BancABC shares.

ADC announced its firm intention to make a mandatory offer to all minority shareholders of its major banking asset ABC Holdings Limited.

ADC intends to acquire all issued ordinary shares of BancABC not already owned by ADC. The mandatory offer is required by the Botswana Stock Exchange (BSE) for any shareholder owning more than 35% of a listed company in Botswana and will be issued at a price of $0.60 per share to BancABC shareholders listed on the Company's Zimbabwe register and at the exchange rate equivalent of BWP 5.05 per share for BancABC shareholders listed on the Botswana register; the price at which ADC acquired a majority shareholding while acting as an underwriter of the bank's rights issue in July 2012.

Subsequent to the rights offer, ADC Mauritius held 120,921,651 ABCH shares (51.9%). The shareholding was diluted to 47.1% in May 2013 due to the conversion by IFC of a convertible loan (24,080,232 new shares).

ADC Mauritius has issued call options to certain ABCH executives in respect of 23,950,728 ABCH shares that it owns, as part of a management incentive scheme. The option price is variable and ranges from $0.83 if exercised now and $1.04 if exercised after May 2014. The options expire in May 2015.

A group of minority shareholders of BancABC support the opinion of an independent valuation expert appointed by the BancABC Board to not accept the mandatory offer. As such, the reduced potential size of the offer to 23% of the shareholders in BancABC is approximately EUR 26 million.

The financing for the uptake of the mandatory offer has been secured from ADC's largest (23%) shareholder and partner, Trafigura. Upon the closing of the mandatory offer, Trafigura will have a direct shareholding in BancABC and has engaged in a voting pool agreement with ADC.

The mandatory offer will be made in accordance with the terms specified in the offer circular, which will be made available at the ADC website via the link as specified below on 18 December 2013.

An independent panel of the ABCH Board is of the opinion that the terms and conditions of the mandatory Offer are fair, but not reasonable to ABCH shareholders and recommend shareholders not to accept the offer. In addition minority shareholders holding 100,020,038 (39%) have provided irrevocable undertakings that they will not accept the Mandatory Offer. These undertakings reduce the potential consideration payable to BWP 151,426,350 (BSE register) and $17,759,877 (ZSE register).

Dirk Harbecke, CEO of ADC commented: 'The mandatory offer is an important milestone for ADC that will significantly increase ADC's representation in BancABC, ADC's most important asset. By engaging in pooling agreements and executing the mandatory offer, we aim to firm-up our control in BancABC and to realize our vision together with the strong BancABC Management team.'
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