20 Aug - 5 min read

Disposal of Shares in Trustco Group Holdings Limited

Disposal of Shares in Trustco Group Holdings Limited

Conduit Capital Limited
Incorporated in the Republic of South Africa
(Registration number 1998/017351/06)
Share code: CND    ISIN: ZAE000073128
(“Conduit Capital” or “the Company” or “the Group”)


DISPOSAL OF SHARES IN TRUSTCO GROUP HOLDINGS LIMITED


1. INTRODUCTION

   The board of directors of Conduit Capital (“the Board”) informs shareholders that the Company’s wholly-
   owned subsidiary, Constantia Risk and Insurance Holdings Proprietary Limited (“Constantia”), has
   concluded an agreement of sale and purchase of shares with Trustco Group Holdings Limited
   (“Trustco”) and Trustco Capital Proprietary Limited, a wholly-owned subsidiary of Trustco (“Trustco
   Capital”) (“Share Sale Agreement”) for the sale of 51 769 633 Trustco shares (“Sale Shares”),
   representing all the shares owned by Conduit Capital and Constantia in Trustco, which are listed on the
   Namibian Stock Exchange (“NSX”) and the JSE Limited (“JSE”) and of which Constantia is the
   registered and beneficial owner, to Trustco Capital, subject to and conditional upon the fulfilment of
   certain Conditions as set out in paragraph 2.3 below (“Share Disposal”).

2. THE SHARE DISPOSAL

   2.1   Nature of the businesses of Constantia and Trustco

         2.1.1    Constantia
                  Constantia is the holding company of the Conduit Capital Group’s three registered
                  insurers, comprising Constantia Insurance Company Limited, Constantia Life Limited
                  and Constantia Life and Health Assurance Company Limited, as well as a number of
                  insurance-related subsidiaries.

                  Constantia offers insurance and risk management solutions, covering areas such as
                  medical malpractice, primary health insurance and medical gap cover products, funeral
                  and life insurance, guarantee and indemnity solutions, medical evacuation insurance,
                  property and casualty (including motor), heavy commercial vehicle, small business and
                  other niche lines. Constantia’s products are distributed through underwriting
                  management agencies, administrator managed (binder based) broker distribution and
                  direct broker relationships.

         2.1.2    Trustco
                  Trustco, which is headquartered in Windhoek, Namibia, operates as an investment
                  holding company with operational control and ownership of emerging market
                  investments in Namibia, South Africa, Sierra Leone and Mauritius. Trustco’s investments
                  are concentrated in two main operating business segments, Financial Services
                  (comprising of Insurance and its investments, and Banking) and Resources, both of
                  which are supported by the Shared Services segment.

   2.2   Rationale for the Share Disposal

         The disposal of the Sale Shares will enable Constantia to reduce the volatility in respect of mark-
         to-market movements in its equity portfolio as well as reduce its risk capital charge. This is
         expected to improve the solvency position of Constantia, in support of the profitable turnaround
         currently underway at Constantia.

   2.3   Conditions and Disposal Effective Date

         The Share Disposal will be subject to and conditional upon the fulfilment of certain Conditions,
         including:

          2.3.1   Trustco Capital obtaining irrevocable and unconditional undertakings from at least 75%
                  of Trustco shareholders to vote in favour of all resolutions required to be passed by them
                  to approve the entering into and implementation of the transaction recorded in the Share
                  Sale Agreement;

          2.3.2   shareholders of Trustco approving the transaction recorded in the Share Sale Agreement
                  to the extent required by the JSE Listings Requirements and the NSX Listings
                  Requirements; and

          2.3.3   the parties to the Share Sale Agreement obtaining all regulatory approvals as may be
                  required to implement the transaction recorded therein.

         The Share Disposal Effective Date is the day after the last of the Conditions to the Share Disposal
         are fulfilled or waived, as the case may be.

         The Share Sale Agreement contains warranties which are usual for transactions of this nature.

   2.3   Consideration

         The Sale Shares will be sold for an amount of N$1.81 per share, constituting a total purchase
         consideration of N$93 703 035.73, which amount will be payable by Trustco Capital to Constantia
         within 24 months of the Share Disposal Effective Date.

   2.4   Cession in Security Agreement

         Simultaneously with the conclusion of the Share Sale Agreement, Trustco, Constantia, LSH and
         Trustco Capital have entered into a “Cession in Security Agreement” in terms of which, inter
         alia,:

          2.4.1   With effect from the day after fulfilment of the last suspensive condition as contained in
                  the Share Sale Agreement (“Cession in Security Effective Date”), and as security for
                  the proper and timeous performance by Trustco Capital of, inter alia, the total purchase
                  consideration of the Sale Shares, Trustco will cede to Constantia and its successors and
                  assigns, as securitatem in debiti the “Ceded Rights and Interest”, being a cession in
                  securitatem debiti of Trustco’s rights, title and interest in and to such amount pursuant to
                  the Loan Account to cover the total purchase consideration of the Sale Shares. The Loan
                  Account refers to Trustco’s claims against LSH as reflected in the LSH management
                  accounts (together with interest thereon) as due by LSH to Trustco.

          2.4.2   The Cession will take effect on the Cession in Security Effective Date. No additional
                  actions will be required to create or perfect the Cession.

          2.4.3   The Cession which is the subject matter of the Cession in Security Agreement will endure
                  and be of force and effect until the Secured Obligations have been discharged in full.

         The Cession in Security Agreement contains warranties which are usual for transactions of this
         nature.

   2.5   Application of the proceeds of the Share Disposal
         The proceeds of the sale will be retained to further capitalise Constantia for growth.

3. FINANCIAL INFORMATION

   The value of the net assets that are the subject of the Share Disposal as at 30 June 2020 and
   31 December 2020, being the latest financial year end and interim period of Conduit Capital,
   respectively, was R189 476 857 and R217 432 459. The (loss) profit after tax attributable to such net
   assets for the year and interim period ended 30 June 2020 and 31 December 2020, respectively, was
   (R197 080 190) and R22 740 935.

4. CATEGORISATION OF THE SHARE DISPOSAL

   The Share Disposal is classified as a Category 2 transaction in terms of the JSE Listings Requirements.


Johannesburg
20 August 2021

Sponsor to Conduit Capital
Merchantec Capital

Date: 20-08-2021 02:00:00
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