BK One Limited Incorporated in the Republic of South ... - Sharenet

BK One LimitedIncorporated in the Republic of South AfricaRegistration Number: 2011/008103/06Preference Share Code: BK1PISIN: ZAE000161352“BK One” or “the Company”Announcement regarding the Company’s decision to restructure; an update relating todevelopments in terms of the proposed acquisition by the Company of controlling interestsin selected assets (the “Target Assets”) owned by Basileus Investments Proprietary Limited(in business rescue) (“Basileus Investments”); and the renewal of cautionary announcement1 IntroductionBK One preference shareholders (“Shareholders”) are referred to the announcementpublished by the Company on the Securities Exchange News Service (“SENS”) on 28August 2012 (the “Previous Announcement”) in which Shareholders were informed that theBK One Board of Directors (the “Board”) intended restructuring BK One, and that BK Onehad entered into a binding memorandum of understanding (“MOU”) to acquire the TargetAssets from Basileus Investments, subject to the fulfilment of a number of conditionsprecedent.The Board is pleased to advise Shareholders of the following developments: the Board hasconducted a thorough analysis of the optimal structure through which the Target Assets,and BK One’s existing assets, should be managed. In light of its analysis, the Boardconcluded that the existing BK One structure, although appropriate for a co-investmentvehicle, is not appropriate for a company responsible for the principal management of aportfolio of developmental assets such as the Target Assets and would, in the view of theBoard, not be conducive to creating a platform for sustainable growth.For this reason, the Board has decided to enter into an assignment and option agreementwith Isitsaba Investment Group Limited (presently K2012149573 (South Africa) ProprietaryLimited) (“IIG”), a company established to take control of the Target Assets in a structurallyefficient manner (the “Assignment”). In addition to the Target Assets, IIG has secured apipeline of additional assets and has assisted in raising funding to support the TargetAssets until such time as Basileus Investments is able to dispose of the Target Assets.2 Terms of the AssignmentThe Assignment entitles IIG, subject to IIG entering into a binding sale and purchaseagreement with Basileus Investments, to acquire the Target Assets from BasileusInvestments. In turn, IIG has agreed to a “put” and “call” arrangement in terms of which BKOne will have the right to:• acquire the Target Assets from IIG (the “Call Option”), at the value BK One wouldhave been entitled to acquire these assets from Basileus Investments reduced byany changes in the interim value (the “Initial Valuation”), should certain triggerevents occur, which events are set out in more detail below (the “Trigger Event/s”);

2• call on IIG to make an offer, using IIG ordinary shares, at the election of BK One,either to acquire the assets of BK One or to acquire the shares and claims ofShareholders (the “Put Option”) at a valuation which is the higher of:oothe Company’s valuation at the date of the call;the Company’s net asset value at 24 August 2012; oro the Company’s market capitalisation at 24 August 2012.IIG intends seeking a listing of its ordinary shares on the Johannesburg Stock Exchange(“JSE”). Should IIG fail to obtain a listing, for whatever reason, a Trigger Event will occurand BK One will be entitled to exercise its rights in terms of the Call Option and will acquirethe Target Assets from IIG in exchange for BK One preference shares. In addition, shouldany director of IIG be removed from office for any reason, a further Trigger Event will occurand BK One will be entitled to exercise its rights in terms of the Call Option.3 Developments pertaining to the MOUDuring the course of IIG and the Company’s evaluation of the various Target Assetsdetailed in the Previous Announcement, the parties have, by mutual consent with BasileusInvestments, agreed that the following assets will no longer form part of the Target Assetsand will not be acquired by either IIG or BK One:• Lefatse Minerals Proprietary Limited;• Tor Oil Infrastructure Construction Proprietary Limited; and• Agri-Technologies and Services Proprietary Limited.4 Rationale for the AssignmentThe Board’s objective is to assist in creating a platform which will result in:• the protection of Shareholders’ value; and• the transformation of BK One and the creation of an efficient and transparentstructure within which to develop the Target Assets and other suitabledevelopmental and investment opportunities.The Assignment, and ultimate intended shareholding structure, allows for:• the creation of an entity better placed to act as the principal manager of a portfolioof developmental assets;• the deployment of people with significant skills and experience to manage the newentity;• the implementation of the acquisition of the Target Assets within the timeline set bythe business rescue process at Basileus Investments;• a simplified capital structure for the purposes of raising equity capital;

3• greater access to potential investors by virtue of employing a widely acceptedcapital structure, which is seen by investors as a traditional mechanism for earlystagedevelopmental capital projects and businesses;• greater ability to utilise ordinary shares to make acquisitions;• greater ability to attract and retain skilled staff through share-based incentivemechanisms; and• greater tax efficiency.5 Regulatory approvals and conditions precedentOnce IIG and Basileus Investments have entered into a binding sale and purchaseagreement, the Assignment will become unconditional. The Assignment is not subject toany regulatory approvals.As the exercise of the Call Option and the Put Option are solely at BK One’s discretion, interms of the Listings Requirements of the JSE, the transaction will only be categorisedupon the exercise of the Call Option or the Put Option.The conditions precedent per the MOU, and as detailed in the Previous Announcement,remain in force and the Company and IIG are confident that these conditions will be fulfilledbefore 30 November 2012, which will result in IIG acquiring the Target Assets fromBasileus Investments.6 Renewal of cautionary announcementThe Company will continue to update Shareholders, through SENS, of developmentspertaining to IIG and the Company. Shareholders are consequently advised to continue toexercise caution when dealing in the Company’s securities until a further announcement ismade.Cape Town8 November 2012Investment Bank, Corporate Advisor andSponsor to BK OneNedbank Capital, a division of NedbankLimitedAttorneysCliffe Dekker Hofmeyr Inc