CONSOLIDATED INFRASTRUCTURE GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2007/004935/06)
JSE share code: CIL ISIN: ZAE000153888
(“CIG” or “the Company”)
DISPOSAL OF EJUVA ONE SOLAR ENERGY PROPRIETARY LIMITED AND EJUVA TWO SOLAR ENERGY PROPRIETARY LIMITED
Shareholders are advised that on 15 October 2020, CIGenCo SA Proprietary Limited (“CIGenCo”), a wholly- owned subsidiary of CIG (the “Seller”), entered into two share sale agreements with the Trustees for the time being of the Mergence Namibia Infrastructure Fund Trust (the “Purchaser”), an unrelated third party to dispose of:
– 49 shares of N$1 (one Namibian dollar) each in the issued share capital of Ejuva One Solar Energy Proprietary Limited (“Ejuva One”) representing 49% of the entire issued share capital of Ejuva One (the “Ejuva One Transaction”); and – 49 shares of N$1 (one Namibian dollar) each in the issued share capital of Ejuva Two Solar Energy Proprietary Limited (“Ejuva Two”) representing 49% of the entire issued share capital of Ejuva Two (the “Ejuva Two Transaction”) (together the “Sale Shares”) together with any claims CIGenCo has against Ejuva One and Ejuva Two (collectively the “Transactions”), for an aggregate consideration of a minimum of N$62 500 000 and a maximum of N$68 000 000, payable in cash in accordance with the terms of the Transactions, as further set out below.
Ejuva One and Ejuva Two represent two 5MW solar photovoltaic plants part of the Namibian Renewable Energy Feed-in-Tariff (REFiT) programme, situated in Gobabis, Namibia (the “Project”). The plants supply electricity to NamPower under a 25-year power purchase agreement. Construction of the plants was successfully completed in 2017 and they have been operational for three years.
2. Rationale for the Transactions
After three years of successful operations, the Company believes that it is an opportune time to realise the value of its investment in the Project. The net proceeds will be utilized to meet CIG’ general financial obligations.
3. Salient terms and conditions precedent of the Transactions
The terms set out below apply mutatis mutandis to the Ejuva One Transaction and to the Ejuva Two Transaction and the two sale agreements are indivisibly linked.
Subject to the fulfilment or waiver (as the case may be) of conditions precedent set out hereunder and with effect from the date on which all of the conditions precedent are fulfilled or waived, with a long stop date of 30 April 2021 (or such later date as agreed to between the parties) (the “Completion Date”), the Purchaser will acquire:
– the Ejuva One Sale Shares and claims for a maximum purchase price of N$34 000 000 payable as to N$32 250 000 to the Seller with an amount of N$2 750 000 to be deposited into an escrow account pending the settlement of a dispute with the Electricity Control Board of Namibia (“ECB”) which amount will be allocated between the Seller and Purchaser depending on the outcome of that dispute; and
– the Ejuva Two Sale Shares and claims for a maximum purchase price of N$34 000 000 payable as to N$32 250 000 to the Seller with an amount of N$2 750 000 to be deposited into an escrow account pending the settlement of a dispute with the Electricity Control Board of Namibia (“ECB”) which amount will be allocated between the Seller and Purchaser depending on the outcome of that dispute;
The Transactions are subject to the fulfilment or waiver of the following conditions precedent:
- obtaining the approval of the ECB to the changes to the shareholding structure as set out in the generation licence for the Project;
- obtaining the consent and approval to the Transactions by the Company’s third debt funders pursuant to the common terms agreement and the equity subordination and share retention agreement;
- obtaining the consent of the debt guarantor to the Transactions pursuant to the share pledge and cession;
- to the extent necessary the Transactions being approved by the relevant Competition Authorities and all other regulatory approvals necessary for the implementation of the Transactions being obtained; and
- obtaining the requisite approvals in terms of the JSE Listings Requirements, including the approval of CIG’s
shareholders necessary to implement the Transactions.
The Seller has given the Purchaser a limited number of warranties that are usual for a transaction of this nature, including the following –
- the Seller is the registered holder and sole legal and beneficial owner of the Sale Shares;
- the annual financial statements and taxation of Ejuva One and Ejuva Two are in order;
- Ejuva One and Ejuva Two are not liable for the payment of any liquidated damages, under the power purchase agreement with NamPower;
- Ejuva One and Ejuva Two are materially compliant with the Environmental and Social Management Plan;
- Ejuva One and Ejuva Two have made no prohibited payments; and
- the maximum total liability of the Purchaser with respect to any breach of warranty is limited to 100% of the purchase price for a period of 12 months from the Completion Date and to 75% of the purchase price for a period of 12 months from month 13 to month 24 from the Completion Date.
The net asset value and the profits attributable to Ejuva One and Ejuva Two are set out below:
Net asset value Profits / (loss) attributable to the
Ejuva One R14 630 R130,4
Ejuva Two R14 581 (R38,1)
The above financial information has been extracted from the audited annual financial statements for the twelve months ended 31 August 2019, which have been prepared in terms of CIG’s accounting policies and International
Financial Reporting Standards.
The Transactions constitute a category 1 transaction in terms of the JSE Listings Requirements and, accordingly, require shareholder approval. Details of the Transactions, together with, inter alia, the pro forma financial effects of the Transactions will be included in the circular to shareholders. The salient dates and times relating to the Transactions will be released on SENS and published in the press at the time of the posting of the circular.
16 October 2020