OMNIA increases offer price to C$0.25 per Nordex share
- Published: Wednesday, 10 August 2016 16:14
- Omnia’s increased offer price provides a 13.6% premium to Nordex shareholders over the highly dilutive EPC transactions
- No other terms or conditions of the Omnia offer are changed
- The Omnia offer will continue to expire at 5:00 p.m. Toronto time on September 9, 2016
Nordex shareholders need to vote AGAINST the inferior EPC transactions to preserve their right to pursue the higher valued Omnia transaction
Johannesburg, South Africa, August 10, 2016– Omnia Holdings Limited (“Omnia”)(JSE: Share code: OMN ISIN: ZAE000005153) today announces that it is increasing its all-cash per share offer price by C$0.03 to C$0.25 per share under its offer to purchase all the common shares of Nordex (the “Offer“). Omnia has notified the depositary of the increased consideration, and has prepared and will be mailing a Notice of Variation to all Nordex shareholders that received the initial Take-Over Bid Circular and Offer. All other conditions of the Offer remain unchanged.
Joseph Keenan, Managing Director of Omnia’s global recognized BME mining explosives division said, “Nordex shareholders are faced with two choices – an undervalued EPC offer combined with a highly-dilutive private placement at a massive 52% discount to the revised BME offer that could very well result in Nordex shareholders receiving no cash payment and remaining minority holders in an EPC subsidiary, or our offer, which delivers the most cash, directly into the hands of those shareholders. We think the decision for Nordex shareholders is an easy one to make.”
Mr. Keenan continued, “We remain open to discussing an agreement with Nordex and an appropriate short term funding solution through to completion of the Offer. From the outset, BME has put forward several options to provide bridge financing to completion of the Offer transaction which were ignored by Nordex. We are also prepared to meet and talk with its debt holders at any time, in order to address the orderly settling of their debt as part of our total transaction package. This is clearly in the best interests of BME and Nordex.”
In order for Nordex shareholders to have the opportunity to pursue the higher valued Omnia Offer, they must vote AGAINST the inferior EPC transactions at the Nordex shareholder meeting to be held on August 18, 2016.
Responses to Recent Public Statements made by Nordex
Nordex continues on a path of not being completely truthful with its shareholders and pursuing a transaction that is not in the best interest of Nordex shareholders. These can be seen in a number of statements made by Nordex and which merit public response and rebuttal:
- The Omnia Offer results in Cash Payments to Nordex Shareholders whereas the EPC Transaction may not. Omnia will pay each and every Nordex shareholder that accepts the Offer, C$0.25 in cash per share. Omnia provides full and fair value to Nordex shareholders, and puts cash in the pockets of shareholders. The EPC transaction may, due to the separate mechanism of the going private transaction, result in Nordex shareholders not ever receiving a cash payment if the current Nordex shareholders vote AGAINST the going private transaction.
- Nordex’s Fixation on its Balance Sheet Correction is only Relevant to Nordex Shareholders if they remain a Minority in their own Company. Nordex has spent a great deal of time commenting on EPC’s C$0.12 private placement and how its shareholders will benefit from a “clean balance sheet”. What Nordex ignores is that the balance sheet only needs fixing because existing management completely mismanaged it in the first place, and the cost to current shareholders to create a “clean balance sheet” going forward will be very high. Shareholders have to realize that they only benefit from a “clean balance sheet” if they remain minority shareholders of Nordex, and if that happens, it means they have not received any cash payment for their shares.
- Nordex Shareholders may Cede Control to EPC and not be Paid for doing so. If the highly-dilutive private placement with EPC takes place by the current shareholders voting in favour of it and shareholders vote AGAINST the going private transaction, then Nordex shareholders will suffer a massive dilution at the hands of EPC resulting in a change of control of Nordex in favour of EPC, who will become the controlling 67% shareholder. In that case, Nordex shareholders will suffer becoming 33% minority shareholders in their own company and not receive a single penny for having given up that control. Nordex shareholders must know that by voting for the highly-dilutive private placement, they are voting to give up control of their company without an assurance that they will be directly paid for it.
Omnia, on the other hand, will pay full and fair value for 100% control of Nordex, and will not leave Nordex shareholders as a heavily diluted minority in their own company.
- Omnia will Fund the Business. The Nordex board has also misconstrued what happens when the Offer is successful. They state that BME has “no details … as to who BME plans to fund the Company so it can continue its growth plans.” Omnia is a substantial listed entity that has been in business for 63 years and has a solid track record of profitability and sound balance sheet management. When the Omnia Offer is successful, Nordex will become a private company and a wholly-owned subsidiary of Omnia. Omnia will thereafter be responsible for funding its subsidiary going forward in whatever means it considers appropriate, and will do so, in order keep and develop the business in Kirkland Lake, Ontario. Omnia fully recognizes the need to recapitalize the business as part of this transaction and will do as in terms of the total transaction process, which ultimately is designed to ensure that Nordex is a successful business under the BME umbrella. For Nordex to suggest that Omnia is seeking to acquire Nordex but is not committed to funding the business going forward is simply illogical.
- The Highly-Dilutive, 52% Discounted Private Placement does not Benefit Nordex Shareholders. What the Nordex board is not telling its shareholders is that the C$4.97 million being injected by EPC is primarily to the benefit of EPC. If the Nordex board was truly concerned only with raising the funds necessary it could do it in a manner that is less dilutive or does not cost it to lose control of the company.
- If Nordex raised C$4.97 million of equity at the Offer price of C$0.25 (which is the true market price) it would only need to issue 19,893,820 new common shares and EPC would only have a non-diluted percentage of 32.16%. This would provide Nordex with the same funding but with vastly less dilution and no “free” change of control of Nordexgiven to EPC.
- If EPC were to subscribe at the Offer price, it could achieve its 67% resulting ownership percentage, but would have to spend C$10.36 million. This would be much more advantageous to Nordex shareholders, as it would put much more money into the business of Nordex.
In both situations, EPC is worse off and Nordex shareholders are better off, yet the Nordex board seems intent on pursuing the only iteration of the private placement that results in the exact opposite. Against this the Nordex board can only offer, as a very weak justification, that a private placement at half the current market value is acceptable because it was acceptable when it was agreed, and ignore all of the important subsequent events which have reflected the true value of the company. The Nordex board is responsible for looking after the interests of shareholders and in this regard, they have failed to do so.
Reasons to accept the Offer and to NOT support the inadequate EPC transactions continue to include:
- Significant Premium for Shareholders: The Cdn$0.25 cash Offer price per Share represents a significant 13.6% premium to the value offered to Nordex shareholders in the proposed EPC transactions. Based on the revised Offer price, Omnia has increased the cash payment to shareholders by C$0.07 per share or a 39% increase from the original price offered by EPC of C$0.18 per share.
- The Going Private Transaction with EPC puts Nordex Shareholders at Risk. If the going private transaction with EPC is not completed, Nordex shareholders will have been diluted into a change of control transaction at an unconscionable Cdn$0.12 per share (less than half the value ascribed to those same shares in the Offer) and will be left as minority holders in a controlled subsidiary of EPC with no means to realize full value for their shares.
- The EPC Transactions keeps Significant Funds away from Nordex and its Shareholders. The proposed change of control private placement to EPC is highly dilutive at Cdn.$0.12 per share, a full Cdn.$0.13 per share or 52% less than our Offer. The result of the EPC transactions, if they are successful, is that they:
- resultin Nordex issuing 40.8 million shares at Cdn.$0.13 per share below their true value, which results in approximately Cdn.$5.3 million not being invested in the Nordex business; and
- deny Nordex shareholders an additional $0.03 per share or Cdn.$612,000 of value for their shares.
- Omnia will Benefit the Local Kirkland Lake Community and Omnia will Fund for its Long Term Success. The Nordex business will not be leaving Kirkland Lake, Ontario. Omnia sees Nordex as the ideal base to grow its North American business, and has the financial means and capacity to ensure that the facility continues to provide jobs to the surrounding community for years to come and to make the necessary technical investment to improve the business. BME management has conducted a review of operations at site and have in-hand a business plan to significantly improve the business going forward.
- Realize Immediate and Certain Value: The all-cash consideration provides shareholders with the opportunity to realize an immediate and certain value for their Shares.
- Remove the opportunity for EPC to significantly dilute current Nordex shareholders. EPC’s subscription at a subscription price of Cdn$0.12, through which it will come to own 67% of the Nordex shares, is highly opportunistic, undervalues Nordex and represents a 52% discount to the share price set out in the Offer.
- Fully-Financed All-Cash Offer: In accordance with applicable Canadian securities laws, the Offer is not subject to a financing condition and is being made from cash on hand.
- Offer Provides Shareholders with Liquidity: Nordex shareholders currently have limited liquidity based on the trading history of the Nordex Shares, and the fully-funded Offer provides an opportunity for shareholders to dispose of all of their Shares for a clean cash consideration of Cdn$0.25 and at value levels not seen in the Nordex Share price since the first half of 2015.
- Post Transaction Balance Sheet: On the basis that Omnia/BME is successful in the transaction, the current debt to third party financiers will be settled and allow the business to function properly. This settlement of this debt post-Offer is not a concern for current shareholders in terms of the Omnia Offer who will receive full value in cash for their Nordex shares and not be concerned about the future structuring of the balance sheet or financing of Nordex.
About the Offer and Shareholder Queries
The Offer is open for acceptance until 5:00 p.m. (Toronto time) on September 9, 2016 unless the Offer is extended or withdrawn. The Offer is subject to customary conditions, including there being validly deposited under the Offer such number of Nordex shares which constitute at least 66⅔% of the total outstanding Nordex shares, no material adverse changes in respect of Nordex, receipt of all necessary governmental and regulatory approvals and that the EPC transactions not be approved by Nordex shareholders.
Neither Omnia nor any of its affiliates owns any securities of Nordex, and Omnia is not directly or indirectly seeking the power to act as a proxyholder for any securityholder of Nordex.
If you have any questions, or need assistance with depositing your Nordex Shares, please contact the Depositary and Information Agent for the Offer:
Laurel Hill Advisory Group
Toll-Free (North America): 1-877-452-7184
Outside North America: 1-416-304-0211
Omnia Holdings Limited is a diversified chemicals group, listed on the Johannesburg Stock Exchange with a market capitalization of R10.8 billion (Cdn$980 million), with specialised services and solutions for the agriculture, mining and chemicals industries. Group turnover for the financial year ended 31 March 2016 was R16.8 billion (Cdn$1.5 billion).
The Group differentiates itself from other commodity chemical providers by adding value at every stage of the supply and service chain through technological innovation and by deploying its intellectual capital. The sustainability of the business model is strengthened by targeted backward integration through the installation of technologically advanced plants that manufacture core materials such as nitric acid and explosives emulsions. In addition to securing sources of supply, this enables Omnia to improve operational efficiencies throughout the product development and production cycle.
Omnia, which has its roots in the fertilizer and agriculture industry, has built an in-depth understanding, not only of its core markets in South Africa, but also in the fundamental industries of mining and agriculture in Africa. Based in Johannesburg, South Africa and with operations in 18 countries in Africa, including South Africa, and five countries outside of Africa, Omnia has more than six decades’ experience in the business. Additionally, Omnia continues to grow its global footprint, with business units in Australasia and Brazil and clients in other regions such as Europe, South America and South East Asia.
Omnia provides customised, knowledge-based solutions through its Agriculture, Mining and Chemicals divisions. These divisions include Omnia Fertilizer, BME, Protea Mining Chemicals and Protea Chemicals, all niche businesses that operate with a common objective: to enhance customers’ businesses through research, development and knowledge sharing that will enable them to increase yields and by extension, profit margins. The Group’s proven business model makes it a market leader in chemical services. Omnia continues to grow and prosper, offering value to its customers by tailoring its solutions to their business needs through product and service innovation, and through the expert application thereof.
For further information, please refer to the Omnia website at www.omnia.co.za.
The Mining division services the mining, quarrying and construction industries through BME and Protea Mining Chemicals. BME is a leading manufacturer and supplier of bulk explosives, related accessories and blasting services in South Africa, southern and West Africa, and Australia.
BME is a market leader in bulk emulsion and blended bulk explosives formulations for opencast mining. It produces electronic delay detonators and shocktube initiating systems, and has its own range of boosters. BME also manufactures packaged explosives for underground mining and specialised surface blasting operations. BME offers a world-class blasting consultancy service with a combination of leading edge proprietary technology and world class expertise.
Industry experts, experienced mining engineers and geologists advise and support customer operations, particularly in the use of BME’s unique and proprietary BLASTMAP™ III software solutions in conjunction with the accurate AXXIS® electronic delay detonators.
Having introduced the technology for cold emulsion explosives into South Africa over 30 years ago and being the first to introduce used oil in the manufacturing of bulk explosives, BME remains driven by innovation and technical ability. Alongside the continuous evolution of BME’s explosives and related products, BME has developed the AXXIS® electronic delay detonators – now an industry standard with an easy-to-use interface – and the BLASTMAP™ III software for blast design and planning. This innovative approach leverages cutting-edge knowledge within the business to create significant customer wealth through improved productivity.
For further information, please refer to the BME website at www.bme.co.za.
Joseph Keenan – Managing Director (BME – a division of Omnia Group (Pty) Ltd
Contact: +27 11 709 8793